A recent consensus in the relevant literature finds the main benefit of financial globalization to be its collateral effects. In the last two decades it has also been realized traditional Solow factors of physical capital, labor in efficiency units, and technology are “proximate” causes of growth: they depend on “fundamentals” in which institutions play a central role. We examine whether a country with greater openness to portfolio investment has better quality relevant institutions. The premise is relevant institutions cannot remain completely local when globalization has occurred. Two country-level institutional indicators – developed by the World Bank’s Doing Business team – that became available in 2010 are used. The sample consists of all developing countries for which both portfolio and institutional data are available. We find countries with greater financial globalization have institutions of higher quality. This conclusion is robust to using i) a different sample,ii) alternative dependent variables, iii) alternative or additional control variable and an additional regressor, iv) different techniques to examine endogeneity, and v) is supported by a natural experiment.