Global Journal of Management and Business Research, B: Economics and Commerce, Volume 20 Issue 1

Table 4: The fixed-effect model FINANCE Coef. Std.Err. t P > |t| RGDPC -0.460 0.257 -1.79 0.076* INFLATION 2.104 0.007 312.57 0.000*** INTECO -0.492 0.052 -9.39 0.000*** INSTPOL -0.464 0.083 -5.60 0.000*** INSTFIN -1.395 0.232 -6.02 0.000*** CONSTANT 3.961 0.788 5.02 0.000*** sigma_u 0.109 0.098 0.552 sigma_e rho Prob> F = 0.000***F test that all u_i F(7, 131) = 6.81 Source: Author Notes: INTECO= Economic Institutions; INSTPOL =Political Institutions;INSTFIN= Financial Institutions; RGDPC = Gross Domestic Product per capita. P value* and *** indicate respectively 10% and 1%, of significance levels. Table 5: The random effects model FINANCE Coef. Std.Err. z P > |z| RGDPC -0.315 0.122 -2.58 0.010*** INFLATION 2.093 0.006 356.30 0.000*** INTECO -0.487 0.046 -10.52 0.000*** INSTPOL -0.540 0.0722 -7.47 0.000*** INSTFIN -1.210 0.217 -5.58 0.000*** CONSTANT 3.276 0.531 6.17 0.000*** sigma_u 0.051 0.098 0.213 sigma_e rho Prob> chi2 = 0.000 wald chi2 (5) = 351754.94 Source: Author Notes: INTECO= Economic Institutions; INSTPOL =Political Institutions;INSTFIN= Financial Institutions; RGDPC = Gross Domestic Product per capita. P value *** indicates 1%, of significance level. Table 6: Test Hausman and Test of Breusch-Pagan Test of Breusch-Pagan Test Hausman Chi2 (1) 9.37 Chi2 (5) 16.88 Prob> chi2 0.0022 Prob> chi2 0.0047 Source: Author b. The OECD Zone As in our previous results, we achieved results almost similar to those obtained in our regressions for the WAEMU countries. First of all: - Global significance tests of both models (Fixed Effects and Random Effects) show that both models are significant - The signs of the coefficients for the two (2) models are almost identical. - Apart from the Inflation variable, all other variables are significant. The significance of the ''Economic growth'' variable is only at the 10% threshold. © 2020 Global Journals 33 Global Journal of Management and Business Research Volume XX Issue I Version I Year 2020 ( ) B Institutional Quality and Financial Development in West Africa Economic and Monetary Union Test Hausman: H0: difference in coefficient not systematic Because the probability of Hausman's test (0.0047) is less than 5%, the fixed-effect model is preferable to the random effects model. Test of Breusch-Pagan: This test decides between a random effects regression and a simple OLS regression. The probability of Breusch- Pagan test (0.0022) is less than 5%, so the null hypothesis is accepted, and the random effect is appropriate.