The Nonlinear Impact of Institutional Quality on International Reserves: International Evidence-Reference-Cited by-同舟云学术

The Nonlinear Impact of Institutional Quality on International Reserves: International Evidence

Published:2021-10 Issue:03 Volume:12 Page:
ISSN:1793-9933
Container-title:Journal of International Commerce, Economics and Policy
language:en
Short-container-title:J. Intl Econ. Comm. Policy.

Author:

Law Chee-Hong¹^ORCID,Soon Siew-Voon²,Ehigiamusoe K. U.³

Affiliation:

1. School of Social Sciences, Universiti Sains Malaysia, Gelugor 11800 Penang, Malaysia

2. Department of Economics and Applied Statistics, Faculty of Business and Economics, Universiti Malaya 50603 Kuala Lumpur, Wilayah Persekutuan, Malaysia

3. School of Accounting and Finance, Faculty of Business and Law, Taylor’s University, 47500 Subang Jaya, Selangor, Malaysia

Abstract

This paper investigates the nonlinear effect of institutional quality on the holding of international reserves by applying the two-step system generalized method of moments on data consisting of 67 countries from 1996 to 2016. The hypothesis is that the association between institutional quality and international reserves has an inverted U pattern. The coefficient sign of the institutional quality and its square term supports the hypothesis. Besides, the marginal effects suggest that the higher the institutional quality index, the lower the demand for reserves. The outputs indicate the importance of good institutional quality in reducing the overdependence on international reserves.

Funder

Universiti Sains Malaysia

Publisher

World Scientific Pub Co Pte Ltd

Subject

Economics and Econometrics,Finance,General Business, Management and Accounting

Link

https://www.worldscientific.com/doi/pdf/10.1142/S1793993321500149

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