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Financial Liberalization, Bank Crises and Growth: Assessing the links

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  • Alessandra Bonfiglioli
  • Caterina Mendicino

Abstract

This paper studies the effects of financial liberalization and banking crises on growth. It shows that financial liberalizations spurns on average economic growth. Banking crises are harmful for growth, but to a lesser extent in countries with oper financial system and good institutions. The positive effect of financial liberalization is robust to different definitions. While the removal of capital account restrictions is effective by increasing financial depth, equity market liberalization affects growth directly. The empirical analysis is performed through GMM dynamic panel data estimations on a panel of 90 countries observed in the period 1975-1999.

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Bibliographic Info

Paper provided by Department of Economics - University Roma Tre in its series Departmental Working Papers of Economics - University 'Roma Tre' with number 0044.

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Length: 18
Date of creation: Mar 2005
Date of revision:
Handle: RePEc:rtr:wpaper:0044

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Keywords: Capital account liberalization; equity market liberalization; financial development; institutions; dynamic panel data;

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References

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Citations

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Cited by:
  1. Shahbaz, Muhammad & Malik, Muhammad Nasir, 2011. "Does financial instability weaken the finance-growth nexus? A case for Pakistan," MPRA Paper 28562, University Library of Munich, Germany.
  2. Pasali, Selahattin Selsah, 2013. "Where is the cheese ? synthesizing a giant literature on causes and consequences of financial sector development," Policy Research Working Paper Series 6655, The World Bank.
  3. Bonfiglioli, Alessandra, 2005. "How Does Financial Liberalization affect Economic Growth?," Seminar Papers 736, Stockholm University, Institute for International Economic Studies.
  4. Jamel Boukhatem, 2012. "Marchés obligataires et crises bancaires dans les pays émergents: le rôle des institutions," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(5), pages 625-646, December.
  5. Alessandra Bonfiglioli, 2006. "Financial integration, productivity and capital accumulation," Economics Working Papers 988, Department of Economics and Business, Universitat Pompeu Fabra.
  6. Saoussen Ben Gamra & Mickaël Clévenot, 2008. "Les effets ambigus de la libéralisation financière dans les pays en développement Croissance économique ou instabilité financière ?," Post-Print hal-00323334, HAL.
  7. repec:diw:diwfin:diwfin02030 is not listed on IDEAS
  8. Andrew van Hulten & Michael Webber, 2010. "Do developing countries need 'good' institutions and policies and deep financial markets to benefit from capital account liberalization?," Journal of Economic Geography, Oxford University Press, vol. 10(2), pages 283-319, March.

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