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Financial Liberalization, Bank Crises and Growth: Assessing the Links

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Author Info
Alessandra Bonfiglioli
Caterina Mendicino

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

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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alessandra Bonfiglioli, 2006. "Financial Integration, Productivity and Capital Accumulation," Economics Working Papers 988, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
  2. 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_v1, HAL. [Downloadable!]
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