IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Financial Liberalization and Institutional Development

  • Markus Alzer
  • Ramin Dadasov

This paper empirically analyzes the effects of de jure financial openness on institutional quality as captured by indicators on investment risk, corruption level, impartiality of judiciary system as well as the effectiveness of bureaucratic authorities. Using a panel data set of more than 110 countries and a time span from 1984 to 2005, we show that a higher degree of financial openness improves institutional quality in particular by reducing investment risks. We also study the effect of a single liberalization reform on the development of institutional quality. Again, we find evidence for the beneficial impact of financial liberalization with the exception of the level of corruption. We additionally show that if financial liberalization is supported by simultaneous political liberalization, the benign consequences of financial opening for the institutional performance are even larger, while financial deregulation in former socialist countries tends to worsen institutional quality.

(This abstract was borrowed from another version of this item.)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://hdl.handle.net/10.1111/ecpo.12019
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Wiley Blackwell in its journal Economics & Politics.

Volume (Year): 25 (2013)
Issue (Month): 3 (November)
Pages: 424-452

as
in new window

Handle: RePEc:bla:ecopol:v:25:y:2013:i:3:p:424-452
Contact details of provider: Web page: http://www.blackwellpublishing.com/journal.asp?ref=0954-1985

Order Information: Web: http://www.blackwellpublishing.com/subs.asp?ref=0954-1985

References listed on IDEAS
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.:

as in new window
  1. Harms, Philipp & an de Meulen, Philipp, 2013. "Demographic structure and the security of property rights: The role of development and democracy," European Journal of Political Economy, Elsevier, vol. 29(C), pages 73-89.
  2. Campos, Nauro F & Coricelli, Fabrizio, 2009. "Financial liberalization and democracy: The role of reform reversals," CEPR Discussion Papers 7393, C.E.P.R. Discussion Papers.
  3. Barry Eichengreen & David Leblang, 2006. "Democracy and globalisation," BIS Working Papers 219, Bank for International Settlements.
  4. Ramin Dadasov & Philipp Harms & Oliver Lorz, 2013. "Financial integration in autocracies: Greasing the wheel or more to steal?," Economics of Governance, Springer, vol. 14(1), pages 1-22, February.
  5. Alvarez-Diaz, Marcos & Caballero Miguez, Gonzalo, 2008. "The quality of institutions: A genetic programming approach," Economic Modelling, Elsevier, vol. 25(1), pages 161-169, January.
  6. Sebnem Kalemli-Ozcan & Laura Alfaro & Vadym Volosovych, 2003. "Why doesn’t Capital Flow from Rich to Poor Countries? An Empirical Investigation," Working Papers 2003-01, Department of Economics, University of Houston.
  7. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Institutions and the resource curse," GE, Growth, Math methods 0210004, EconWPA.
  8. Leonardo Bartolini & Allan Drazen, 1996. "Capital Account Liberalization as a Signal," NBER Working Papers 5725, National Bureau of Economic Research, Inc.
  9. Acemoglu,Daron & Robinson,James A., 2006. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521855266, November.
  10. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
  11. Islam, Roumeen & Montenegro, Claudio E., 2002. "What determines the quality of institutions?," Policy Research Working Paper Series 2764, The World Bank.
  12. Giavazzi, Francesco & Tabellini, Guido, 2005. "Economic and political liberalizations," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1297-1330, October.
  13. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment: Updates and Implications," CID Working Papers 42, Center for International Development at Harvard University.
  14. José Antonio Alonso & Carlos Garcimartín, . "The Determinants of Institutional Quality. More on the Debate," Discussion Papers 09/04, University of Nottingham, CREDIT.
  15. Akira Ariyoshi & Andrei A Kirilenko & Inci Ötker & Bernard J Laurens & Jorge I Canales Kriljenko & Karl F Habermeier, 2000. "Capital Controls; Country Experiences with Their Use and Liberalization," IMF Occasional Papers 190, International Monetary Fund.
  16. Ali, Fathi & Fiess, Norbert & MacDonald, Ronald, 2009. "Climbing to the top? Foreign Direct Investment and Property Rights," SIRE Discussion Papers 2009-03, Scottish Institute for Research in Economics (SIRE).
  17. M Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 8-62, April.
  18. Luis Angeles, 2010. "Institutions and economic development: panel evidence," Working Papers 2010_03, Business School - Economics, University of Glasgow.
  19. Simon Commander & Zlatko Nikoloski, 2011. "Institutions and Economic Performance: What Can be Explained?," Review of Economics and Institutions, Università di Perugia, vol. 2(2).
  20. Fathi Ali & Norbert Fiess & Ronald MacDonald, 2010. "Do Institutions Matter for Foreign Direct Investment?," Open Economies Review, Springer, vol. 21(2), pages 201-219, April.
  21. Philipp Harms & Philipp Meulen, 2012. "The demographics of expropriation risk," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(3), pages 809-832, July.
  22. Busse, Matthias & Hefeker, Carsten, 2007. "Political risk, institutions and foreign direct investment," European Journal of Political Economy, Elsevier, vol. 23(2), pages 397-415, June.
  23. Felipe Larraín & José Tavares, 2004. "Does Foreign Direct Investment Decrease Corruption?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 41(123), pages 217-230.
  24. Chwieroth, Jeffrey, 2007. "Neoliberal Economists and Capital Account Liberalization in Emerging Markets," International Organization, Cambridge University Press, vol. 61(02), pages 443-463, April.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bla:ecopol:v:25:y:2013:i:3:p:424-452. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.