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International Financial Integration and Economic Growth: New Evidence on Threshold Effects

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  • Jinzhao Chen

    (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

  • Thérèse Quang

    (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

Recent research highlights that countries differ with respect to their experience with capital flows and do not systematically gain from capital account liberalization. This paper is related to the empirical literature that investigates the particular conditions under which international financial integration (IFI) is growth-enhancing. Relying on non-linear panel techniques, we find that countries that are able to reap the benefits of IFI satisfy certain threshold conditions regarding the level of economic, institutional and financial development, and the inflation rate. Our results also reveal a differentiated behaviour of foreign direct investment and portfolio liabilities compared to debt liabilities.

Suggested Citation

  • Jinzhao Chen & Thérèse Quang, 2012. "International Financial Integration and Economic Growth: New Evidence on Threshold Effects," PSE Working Papers halshs-00710139, HAL.
  • Handle: RePEc:hal:psewpa:halshs-00710139
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00710139
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    References listed on IDEAS

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    Cited by:

    1. Evans, Olaniyi, 2013. "International Financial Integration and The Nigerian Economic Performance: a Var Modeling Approach," MPRA Paper 52459, University Library of Munich, Germany.
    2. Duygu Yolcu Karadam & Nadir Ocal, 2014. "Financial Integration and Growth: A Nonlinear Panel Data Analysis," ERC Working Papers 1415, ERC - Economic Research Center, Middle East Technical University, revised Nov 2014.
    3. Roseline Nyakerario Misati & Clement Ighodaro & Maureen Were & John Omiti, 2015. "Financial Integration and Economic Growth in the COMESA and SADC Regions," Journal of African Business, Taylor & Francis Journals, vol. 16(1-2), pages 109-127, January.
    4. repec:ibn:ijefaa:v:9:y:2017:i:4:p:185-190 is not listed on IDEAS
    5. repec:arp:ijefrr:2017:p:182-196 is not listed on IDEAS
    6. Ahmed, Abdullahi D. & Mmolainyane, Kelesego K., 2014. "Financial integration, capital market development and economic performance: Empirical evidence from Botswana," Economic Modelling, Elsevier, vol. 42(C), pages 1-14.
    7. Madiha Bashir & Attiya Yasmin Javid, 2014. "Financial Flows, External Capital Structure, Institutions and Economic Growth in Asian Developing Economies," PIDE-Working Papers 2014:108, Pakistan Institute of Development Economics.

    More about this item

    Keywords

    International financial integration; Economic growth; Panel threshold regression model; Intégration financière international; croissance économique ; modèle à seuil en panel;

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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