Trade and governance in developing Asia: the role of FinTech in shaping institutional quality and global integration

Weak Governance infrastructures are usually considered as main reason behind the poor economic performance of developing countries. In this context, S D G 16 is particularly designed for peace, justice, and strong institutions. Considering the increasing economic integration among nations, this study has proposed a model in which trade openness is taken as a key driver of governance improvement. Several studies also exist against economic integration; they claim that globalization works in favor of developed countries while against developing countries. However, this study is based on a panel of developing Asian countries for the period 1996 to 2022. panel quantile and Driscoll-Kraay two-step ECM methods are the key econometric approaches of this study, one of robust for non-normality, while the other is for cross-sectional dependence, respectively. This study has confirmed that trade openness initially promotes institutional improvement. But a consistent trade openness expansion eventually brings it down. Financial technologies (FinTech) are taken as a determinant of governance and a moderator of trade openness. It is confirmed that FinTech enhances governance quality and supports a more sustainable relationship between trade and institutions. Among control variables, inflation deteriorates governance quality, whereas educational expenditures and debt servicing contribute in favor of governance.