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Financial Liberalization, Bank Crises and Growth: Assessing the links

  • Alessandra Bonfiglioli
  • Caterina Mendicino

This paper studies the effects of financial liberalization and banking crises on growth. It shows that financial liberalizations spurns on average economic growth. Banking crises are harmful for growth, but to a lesser extent in countries with oper financial system and good institutions. The positive effect of financial liberalization is robust to different definitions. While the removal of capital account restrictions is effective by increasing financial depth, equity market liberalization affects growth directly. The empirical analysis is performed through GMM dynamic panel data estimations on a panel of 90 countries observed in the period 1975-1999.

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Paper provided by Department of Economics - University Roma Tre in its series Departmental Working Papers of Economics - University 'Roma Tre' with number 0044.

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Length: 18
Date of creation: Mar 2005
Date of revision:
Handle: RePEc:rtr:wpaper:0044
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