Work

Trade and governance in developing Asia: the role of FinTech in shaping institutional quality and global integration

Year: 2025

Type: article

Abstract: Weak Governance infrastructures are usually considered as main reason behind the poor economic performance of developing countries. In this context, S D G 16 is particularly designed for peace, justice, and strong institutions. Considering the increasing economic integration among nations, this study has proposed a model in which trade openness is taken as a key driver of governance improvement. Several studies also exist against economic integration; they claim that globalization works in favor of developed countries while against developing countries. However, this study is based on a panel of developing Asian countries for the period 1996 to 2022. panel quantile and Driscoll-Kraay two-step ECM methods are the key econometric approaches of this study, one of robust for non-normality, while the other is for cross-sectional dependence, respectively. This study has confirmed that trade openness initially promotes institutional improvement. But a consistent trade openness expansion eventually brings it down. Financial technologies (FinTech) are taken as a determinant of governance and a moderator of trade openness. It is confirmed that FinTech enhances governance quality and supports a more sustainable relationship between trade and institutions. Among control variables, inflation deteriorates governance quality, whereas educational expenditures and debt servicing contribute in favor of governance.

Source: Research in Globalization

DOI: 10.1016/j.resglo.2025.100326

Authors: Ramsha Saleem, Mubasher Iqbal, Noman Arshed, Judit Oláh, Muhammad Naeem