Finance: Theory and Practice | 2026
Authors: Nguyen T.A.N.; Luong T.T.H.
DOI: 10.26794/2587-5671-2026-30-2-162-171
Journal: Finance: Theory and Practice
Year: 2026
Publisher: Financial University under The Government of Russian Federation
Document Type: Article
Open Access: All Open Access; Gold Open Access; Green Open Access
Cited by: 0
There is abundant literature on the nexus between finance and economic growth while the impact of financial openness and financial development on economic growth is scarce, especially for transition economies. Hence this study aims to investigate this linkage to examine whether financial openness and financial development improve or worsen the economic growth of transition countries. We utilize financial development by broad indicators of both financial institutions and financial market development to present its multifaceted concept. Econometrically, the authors used several estimation techniques for panel data of 27 transition countries over the period 1995–2022. Our empirical findings documented the robust positive impacts of financial openness and financial development on economic growth. Remarkably, this linkage exhibits a stronger effect when we observe financial openness and financial development in combination. Also, while three indicators of financial institutions, including access, depth, and efficiency exert beneficial effects on economic growth, only the financial market depth has a positive impact, and the aggregate financial market index does not. This ambiguous finding exploits the dark sides of financial market development that require further investigations. Our research makes a valuable contribution to the scant extant literature and offers significant implications for transition economies when formulating economic development policies. © Nguyen T.A.N., Luong T.T.H., 2026.
economic growth; financial development; financial institution access; financial institution depth; financial institution efficiency; financial market depth; financial market development; financial openness; transition economies