Abstract:
This unique study investigates the effect of financial development on investment with the
moderating role of financial freedom over the globe. We used the cross-country data for the
financial sector from 1990 to 2020. Using the pooled estimation model, we document that
financial development is a positive and significant effect on the level of investment.
Furthermore, the interactive term of financial development and financial freedom positively
affects the investment level and strengthens the existing relationship. This research recommends
careful consideration in the measure of financial development that is used as a policy key driver
to raise the level of investment. This study also highpoint the prominence of employing the
country-specific investment policies to evade the blanket strategy measure. The financial
efficiency should be given importance when predicting the investment into the future.
