The political economy of financial reform: are Abiad and Mody right?
Motivated by the questions 'Financial Reform: What Shakes It? What Shapes It?' raised by Abiad and Mody (2005), this paper studies the forces that induce governments to undertake financial sector reform. Rather than their ordered logit technique, it uses a within groups approach allowing for error dependence across countries and over time. This analysis shows that some of the AM findings are not robust to error dependence and the estimation method. It has shed new light on the political economy of financial reform. Copyright © 2009 John Wiley & Sons, Ltd.
Volume (Year): 24 (2009)
Issue (Month): 7 ()
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- M. Hashem Pesaran, 2004.
"Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure,"
CESifo Working Paper Series
1331, CESifo Group Munich.
- M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, 07.
- Arellano, M, 1987. "Computing Robust Standard Errors for Within-Groups Estimators," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(4), pages 431-34, November.
- Ashoka Mody & Abdul Abiad, 2003.
"Financial Reform: What Shakes it? What Shapes it?,"
IMF Working Papers
03/70, International Monetary Fund.
- Pesaran, M. Hashem, 2004.
"General Diagnostic Tests for Cross Section Dependence in Panels,"
IZA Discussion Papers
1240, Institute for the Study of Labor (IZA).
- Pesaran, M.H., 2004. "‘General Diagnostic Tests for Cross Section Dependence in Panels’," Cambridge Working Papers in Economics 0435, Faculty of Economics, University of Cambridge.
- M. Hashem Pesaran, 2004. "General Diagnostic Tests for Cross Section Dependence in Panels," CESifo Working Paper Series 1229, CESifo Group Munich.
- Yongfu Huang, 2006. "On the political economy of financial reform," Bristol Economics Discussion Papers 06/586, Department of Economics, University of Bristol, UK.
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