Linkages between Financial Development and Openness: panel evidence from developing countries
AbstractIn this paper, we contribute to existing literature on financial development and openness by, sampling twenty-nine African countries with data spanning from 1987 to 2008. Using panel empirical techniques, we provide evidence of bi-directional causality between trade openness and financial openness; albeit, the former, bearing much more impact on the later. Neither capital openness nor trade openness, significantly account for financial development. Our results are robust to variable interaction via Principal Component Analysis. For sampled countries, policy towards trade openness should be effective in view of inviting private capital flows.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 26926.
Date of creation: 20 Oct 2010
Date of revision:
Trade Openness; Financial Openness; Financial Development; Panel; Africa;
Find related papers by JEL classification:
- G1 - Financial Economics - - General Financial Markets
- D6 - Microeconomics - - Welfare Economics
- G0 - Financial Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-AFR-2010-12-04 (Africa)
- NEP-ALL-2010-12-04 (All new papers)
- NEP-INT-2010-12-04 (International Trade)
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