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Do institutional quality and trade openness enhance the role of financial openness in Eastern European financial development?

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  • Nam, Hyun-Jung
  • Batten, Jonathan A.
  • Ryu, Doojin

Abstract

This study examines the impact of financial openness on financial development and the moderating roles of institutional quality and trade openness in Eastern European countries over several decades. We focus on the period following the Berlin Wall (post-1989) and the transition from centrally planned to market-oriented economies after 1991. Financial openness promotes financial development, with institutional quality strengthening this effect, whereas trade openness weakens the positive impact of financial openness. Our results suggest that excessive openness may hinder financial development in Eastern Europe, highlighting the need for a balanced approach to financial globalization, particularly in transitioning economies.

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  • Nam, Hyun-Jung & Batten, Jonathan A. & Ryu, Doojin, 2025. "Do institutional quality and trade openness enhance the role of financial openness in Eastern European financial development?," Global Finance Journal, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:glofin:v:64:y:2025:i:c:s1044028324001431
    DOI: 10.1016/j.gfj.2024.101071
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    Cited by:

    1. Nam, Hyun-Jung & Ryu, Doojin, 2025. "Does international trade moderate economic development’s impact on income inequality in the EU?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 99(C).

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    More about this item

    Keywords

    Eastern Europe; Financial development; Financial openness; Institutional quality; Trade openness;
    All these keywords.

    JEL classification:

    • B17 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - International Trade and Finance
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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