<p>This paper explores the relationship between military expenditure and various institutional variables in EU countries. Military expenditure represents a unique segment of government spending, characterized by its connections to national security and the need for confidentiality. However, its interaction with a country’s institutional framework is a relatively unexplored research area. The analysis employs a panel Autoregressive Distributed Lag (P-ARDL) model to empirically examine the association between World Bank’s Worldwide Governance Indicators (WGI) and military expenditure. The findings reveal that political stability, corruption, and the rule of law are significant determinants of military spending in the long run. This suggests that the broader institutional environment plays a crucial role in shaping decisions regarding the allocation of government funds to military and defense purposes. By shedding light on these associations, the study contributes to a deeper understanding of how governance quality influences defense budget decisions, emphasizing the need for robust institutions to ensure optimal military expenditure.</p>