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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 liberalization spurs on average economic growth. Banking crises are harmful for growth, but to a lesser extent in countries with open financial systems 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 and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 946.

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Date of creation: Oct 2004
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Handle: RePEc:upf:upfgen:946

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

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Cited by:
  1. 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.
  2. Alessandra Bonfiglioli, 2007. "Financial Integration, Productivity and Capital Accumulation," IEW - Working Papers 350, Institute for Empirical Research in Economics - University of Zurich.
  3. 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, Oxford University Press, vol. 10(2), pages 283-319, March.
  4. 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.
  5. 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.
  6. Claudia M. Buch & Katja Neugebauer, 2010. "Bank-Specific Shocks and the Real Economy," Working Paper / FINESS, DIW Berlin, German Institute for Economic Research 2.3, DIW Berlin, German Institute for Economic Research.
  7. Bonfiglioli, Alessandra, 2005. "How Does Financial Liberalization affect Economic Growth?," Seminar Papers, Stockholm University, Institute for International Economic Studies 736, Stockholm University, Institute for International Economic Studies.
  8. Jamel Boukhatem, 2012. "Marchés obligataires et crises bancaires dans les pays émergents: le rôle des institutions," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(5), pages 625-646, December.
  9. repec:diw:diwfin:diwfin02030 is not listed on IDEAS

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