ABSTRACT
The forging of an affirmative image of the new Silk Road strategy in the international community has given rise to opportunities for financial services under the pressing trends of globalisation. The objective of this study was to examine the roles of financial development and globalisation on the economic growth of BRI countries in the twenty-first century Maritime Silk Road from various perspectives. The findings imply that insurance services are more important than banking services in influencing the growth of BRI countries; overall globalisation effects are beneficial to growth; and the impacts of financial services on growth tend to depend on aspects of globalisation.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 Only 50 countries out of 66 (including China) were selected as those countries with incomplete data were eliminated. The period started from 2010, as it symbolises the era of the twenty-first century Maritime Silk Road. The data was up to 2015 as the financial development data provided by the World Bank is updated once in two years.
2 List of countries is reported in .
3 Judson and Owen (Citation1999) provide comprehensive discussions on the functions of LSDV and GMM.
4 REM assumes that each of the countries has their own intercepts while restricting the slope to be homogeneous. To address such heterogeneity, the error term is decomposed into two independent components namely the individual specific effect (unobserved heterogeneity) and normal error term. This individual specific effect is assumed to be random variable with mean zero and variance equal to zero and more crucially it is uncorrelated with the regressor.
5 It is plausible that financial services and globalization may promote economic growth. At the same time, economic growth may also promote the development of financial services and globalization. However, the sample year for this study only covered the years 2010 to 2015, which was also one of the limitations of this study, in that it was unable to extend the sample years due to the unavailability of data. This is because the majority of the BRI countries are developing countries that did not provide financial development data prior to 2010. In addition, as the BRI was initiated in the twenty-first century, it was reasonable to study a sample period of 2010 to 2015. Thus, from the results of the LSDV model and system GMM model, the lag of economic growth was not significant and suggested that the static panel model was sufficient to examine the issues in this study. We thank the anonymous reviewer who highlighted the issue of endogeneity and insignificant results for the coefficients of the independent variables. Our main purpose of the robustness check was to confirm that the signs for the financial development indicators did not change compared to the baseline model and to highlight the substitution role of life insurance services to banking services.