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This research examines the causal impact of institutional quality on economic development from a novel perspective. At the country level, we exploit variation in the natural malaria prevalence in 1900, just before vector-control methods were developed, to instrument for institutional quality using a two-stage least squares instrumental variables framework. Our instrument is a population-weighted average of malaria endemicity estimates for the year 1900 developed by the World Health Organization scientists in the 1960s. We argue that this measure of historical malaria offers more expansive geographic information about the disease environment, and our baseline IV estimates reveal that greater institutional quality causes greater contemporaneous economic growth. Next, we investigate the robustness of these baseline results to alternative explanations, including the role of geography and the role of early colonizers' experiences, as the causal link between the early disease environmental, institutional quality, and contemporary growth. As an additional test of the explanatory power of malaria endemicity in 1900 as an instrumental variable, we replace our instrument for settler mortality and replicate the core results from the seminal study on colonial origins of comparative development by Acemoglu et al. (2001). In summary, we propose that malaria endemicity estimated for 1900 holistically explains the legacy of early disease on institutional quality development and contemporary economic development, thus significantly contributing to the resolution of the geography versus institutions debate. [ABSTRACT FROM AUTHOR]

This study re-examines the impact of financial structure on economic growth for 24 advanced OECD countries from 1980 to 2017 using dynamic panel estimators. Previous literature suggests that financial development can promote economic growth; however, recent literature has expressed skepticism toward the finance-growth nexus. This paper employs financial development indices that capture the multidimensional nature of finance, which considers the accessibility, depth and efficiency of financial markets and institutions, as well as alternative financial development measures such as financial globalisation. The results show that financial markets and financial institutions promote economic growth; however, the effect of financial markets on growth is weaker. Interestingly, the results indicate an inverse U-shaped relationship between overall financial development and economic growth. Equally important, financial globalisation is also positive and significant to growth and indicates a nonlinear relationship. However, the impact of external finance from financial globalisation is weaker compared with overall financial development. Policy implications are discussed. [ABSTRACT FROM AUTHOR]