Financial development and economic freedom

This study examines the relationship between financial development and economic freedom in nine newly industrialized countries (Brazil, China, India, Mexico, Malaysia, the Philippines, South Africa, Thailand, and Türkiye) over the period 2000-2021. Fixed Effects (FE) and Random Effects (RE) models were employed to assess the impact of financial development on economic freedom. Government expenditures, inflation, and GDP per capita were used as control variables. The empirical results indicate that government expenditures and inflation have a statistically significant negative effect on economic freedom, while financial development has a positive effect. The findings highlight that excessive government intervention and inflation tend to restrict economic freedom, whereas financial development and economic growth promote it. The study suggests that governments in sample countries should carefully manage public expenditures without undermining market mechanisms and continue fostering private sector freedom. This research contributes to the understanding of the financial developmenteconomic freedom nexus, especially in newly industrialized countries, and offers valuable insights for policymakers.