Abstract:

Recently, besides the word management, the terms governance and good governance are frequently used in the economics literature. Lack of good governance is recognized as one of the main causes of problems to arise in poorly managed societies. So much so that good governance reforms are sought when providing loans and aids from international financial institutions to donors. It is important to implement good governance for sustainable development. For this reason, the effect of financial indicators on good governance has been examined in this study. Analyzes were conducted for the panel, in which the World Good Governance Index was the dependent variable between 2002-2020 in selected EAGLEs countries. Firstly, the cross-section dependency test and then the Delta test were applied. The findings showed that there is cross-section dependence and heterogeneity in the panel used. Then, CADF-CIPS test, which is one of the second generation unit root tests, was performed. It has been observed that the series are stationary at different orders. The cointegration relationship was investigated by Westerlund (2008) Durbin-Hausmann Test. The coefficients for the cointegrated series were estimated by the CCE method. The results showed that the increase in portfolio investments had a positive effect on good governance, while inflation had a negative effect. On the other hand, country-specific findings were determined in the variables of interest, financial depth and per capita income.

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