Determinants of the global financial crisis recovery: an empirical assessment

Purpose - The purpose of this paper is to empirically assess the effect of the factors contributing to the recovery from this crisis in terms of national GDP growth among the G7, Asian7, and Latin American7 countries. Design/methodology/approach - The author uses a multivariate regression analysis of the determinants of the global financial crisis recovery. Findings - Based on data from 21 developed and developing emerging market economies the author found that good macroeconomic fundamentals together with more open financial policy, financial liberalization, financial depth, domestic performance, and favored global conditions do linearly influence national GDP growth. Over 85 percent of cross-country variations in GDP growth during the recovery phase of the global financial crisis can be explained by its linear dependency on pre-crisis national GDP growth, financial liberalization, financial depth, domestic performance, as well as interaction terms between various explanatory variables. Cross-country differences in national GDP growth also linearly depend on macroprudence and on favorable global conditions. Originality/value - Results of such empirical examination may enable governments in developing countries devise resilience strategies that may serve as powerful tools for dealing with future global financial crises.