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Financial liberalization, disaggregated capital flows and banking crisis: Evidence from developing countries


The aim of this paper is to examine whether or not financial liberalization has triggered banking crises in developing countries. We focus in particular on the role of capital inflows as their volatilities threat economic stability. In the empirical model, based on Panel Logit estimation, we use the two common financial liberalization indicators (de facto and dejure) for a panel of 58 developing countries for the period from 1984 to 2007. Unlike the previous studies, this paper reveals that both indicators of financial liberalization did not trigger banking crises in our sample.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 55779.

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Date of creation: 2013
Date of revision: 2014
Handle: RePEc:pra:mprapa:55779
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  1. Mehrez, Gil & Kaufmann, Daniel, 2000. "Transparency, liberalization, and banking crisis," Policy Research Working Paper Series 2286, The World Bank.
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  29. Julián A. Caballero, 2016. "Do Surges in International Capital Inflows Influence the Likelihood of Banking Crises?," Economic Journal, Royal Economic Society, vol. 126(591), pages 281-316, 03.
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