@workingpaper{Asongu2015b,
title = {Bundling Governance: Finance versus Institutions in Private Investment Promotion},
author = {Enowbi Batuo & Vanessa Tchamyou M S Simplice A. Asongu},
editor = {African 2015 Governance and Development Institute WP/15/051},
url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Bundling-governance.-Finance-Institutions-and-Investment.pdf},
year = {2015},
date = {2015-12-01},
abstract = {Purpose – The study extends the debate on finance versus institutions in the promotion of
investment documented by Acemoglu and Johnson (2005), Ali (2013) and Asongu (2014).
We assess the effects of various components of governance on private investment, notably:
political, economic and institutional governances. Financial indicators of depth, allocation
efficiency, activity and size are used.
Design/methodology/approach – An endogeneity robust dynamic system GMM estimation
technique is employed. Principal component analysis is also employed to reduce the
dimensions of governance variables. The empirical evidence is based on 53 African countries
for the period 1996-2010.
Findings – The findings provide support for the quality of governance as a better determinant
of private investment than financial intermediary development. Moreover, the evidence of
finance and governance as substitutes in their impact on investment implies that good
governance fuels private investment and this positive impact is stronger in nations with less
developed financial systems. This finding is consistent with Ali (2013) and contrary to the
results of Asongu (2014c).
Practical implication – Policy measures for fighting involuntary and voluntary surplus
liquidities are discussed. The paper provides additional support for the need of strengthening
governance institutions to promote investment on the one hand and fighting financial
allocation inefficiency by mitigating surplus liquidity issues on the other hand.
Originality/value – The paper extends the debate on the substitution of finance and
institutions in the promotion of private investment.},
keywords = {Finance; Institutions; Investment: Property Rights; Africa},
pubstate = {published},
tppubtype = {workingpaper}
}

@workingpaper{Asongu2014bw,
title = {On the substitution of institutions and finance in investment},
author = {Simplice A Asongu},
editor = {African 2014 Governance and Development Institute WP/14/005},
url = {http://www.afridev.org/RePEc/agd/agd-wpaper/On-the-substitution-of-institutions-and-finance-in-investment.pdf},
year = {2014},
date = {2014-01-01},
abstract = {The Ali (2013, EB) findings on the nexuses among institutions, finance and investment could
have an important influence on policy and academic debates. This paper relaxes his
hypotheses on the conception, definition and measurement of finance and institutions because
they are less realistic to developing countries to which the resulting policy implications are
destined. We dissect with great acuteness the contextual underpinnings of financial
development dynamics and elucidate why the Acemoglu & Johnson (2005) justification
provided for the measurement of property rights institutions (PRI) is lacking in substance.
Using updated data (1996-2010) from 53 African countries, we provide more robust evidence
on the substitution of institutions and finance in investment. Results under many baseline and
augmented scenarios are not consistent with the underlying paper. Justifications for the
differences in findings are discussed. As a policy implication, the Ali (2013, EB) findings for
countries with poor financial systems may not be relevant for Africa.},
keywords = {Finance; Institutions; Investment: Property Rights; Africa},
pubstate = {published},
tppubtype = {workingpaper}
}