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Impact of national financial regulation on macroeconomic and fiscal performance after the 2007 financial stock: Econometric analyses based on cross-country data

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  • Hagen, Tobias

Abstract

Using cross-country data, this paper estimates the impact of the 2007 financial shock on countries' macroeconomic developments conditional on national financial regulations before the crisis. For this purpose, the financial reform index developed by Abiad et al. (2008) is used. The econometric analyses indicate that countries with more deregulated financial markets experienced deeper recessions, stronger employment losses, and larger government budget deficits. Against the background of the ongoing global crisis and the results of other studies, the usefulness of liberalized financial markets for macroeconomic stability and economic development should be rigorously reconsidered.

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  • Hagen, Tobias, 2013. "Impact of national financial regulation on macroeconomic and fiscal performance after the 2007 financial stock: Econometric analyses based on cross-country data," Working Paper Series 02, Frankfurt University of Applied Sciences, Faculty of Business and Law.
    • Handle: RePEc:zbw:fhfwps:02
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    Cited by:

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    2. Asma Arif & Mujahid Hussain, 2018. "The Role of Governance and Political institutions for Budget Deficit for Low and High Income Countries: A Panel Data Analysis," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 3), pages 357-366.
    3. López-Laborda, Julio & Peña, Guillermo, 2017. "Does financial VAT affect the size of the financial sector?," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 11, pages 1-28.
    4. Kelvin Onwuka & Anayochukwu Basil Chukwu & Tobechi Faith Agbanike, 2021. "Current account and financial reforms: Evidence from sub‐Saharan Africa," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4303-4314, July.

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    More about this item

    Keywords

    Financial Crisis; Financial Regulation; Great Recession; Robust Regression; Semi-Parametric Regression;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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