Financial Regulations and Economic Development: Empirical Evidences from Upper Middle income, lower Middle income and Low Income Countries

Abstract

Financial regulations influence financial system operations. Financial stability and instability is very much dependent on these regulations on which system works. This study investigates impact of financial regulations impact on economic growth and development. For this purpose countries are selected among therein are upper middle income, lower middle income and low income countries. Time period covers 1995-2015. Current account balance regulation is positively affecting growth process in upper middle countries, lower middle income countries and low income countries where as Inflation regulation is only positively affecting growth process in lower middle income economies. Based on paper finding suggests some policy conclusions that can help nations to grow faster. For a prosper growth all set of countries should focus more on current account balance regulation since it’s the most significant regulation that that positively effects growth process. Secondly inflation regulations should be the focus area for countries from lower middle income. These countries if focus more on inflation regulation they can progress more in economic development and growth.