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This paper aims at bringing new insights concerning the effect of financial reforms on banking system vulnerability. We show that the link between financial liberalization and banking crisis depends on the number of years since last regulatory reforms. Similarly, we show that updating regulations indirectly affect banking crisis according to the financial liberalization level. Then, we show that banking crisis can be largely explained by a gap between financial innovations and regulation update on a sample of 49 developed and developing countries from 1980 to 2010. Our empirical evidence supports that the regulatory environment is more important in developed countries as it reduces banking fragility perhaps because of highly-risky exchanged financial products. The effect of financial liberalization depends largely on the number of years since last reform. However, destabilizing effect of financial liberalization in developing countries cannot be neutralized by updating regulations and gets more obvious as regulations become older.

This paper assesses the impact of financial reforms on corruption using a panel of 87 countries for 1984–2005. To account for the dynamic nature and high persistence of corruption, the paper employs the difference and system generalized method of moments (GMM) estimators. It finds that policy reforms targeted towards financial liberalization reduce corruption. This result is robust to the inclusion of a number of control variables and the choice of the GMM estimator. Interestingly, the financial liberalization index is found to be positively correlated with corruption though this relationship is not robust. The findings also indicate that legal origins do not impose a binding constraint on the effectiveness of financial reforms in reducing corruption.

This paper examines whether financial liberalization predisposes countries to capital flow waves. After identifying the waves of FDI, portfolio and other flows, we investigate the relationships between those waves and financial liberalization. Our results demonstrate that waves of these three kinds of capital flows respond quite differently to financial liberalization. Specifically, in emerging countries, surges for the type of other flows show a higher propensity following financial liberalization, while the likelihood of surge episodes of portfolio flows significantly decrease for developed countries. In addition, liberalization may eventually trigger capital flight in portfolio flows in emerging economies. Our conclusions are tested for various scenarios and prone to be robust.

As global macroeconomic uncertainties grow, there are notable shifts and oscillations in Chinese outbound investment and cross-border investment flows. This study shows China’s key investment characteristics including geographical preferences, investment compositions, and structural changes in industrial and foreign policies, such as Made in China 2025, financial liberalization, and OBOR. While these trends seem contradictory at times, opportunities are available for nimble and creative players who could capitalize on China’s increasing demand in the new economy (“xin jing ji”), with adequate consideration of regulatory scrutinies.Keywords. Cross-border, China, Outbound, Investments, Regulations.JEL. F21, F68, O53, K23.

This paper presents and analyzes a simple banking model in which banks have access to international capital markets and domestic asset markets. The model generates two types of equilibria: a no-default equilibrium and a mixed equilibrium. In the no-default equilibrium, all banks are symmetric and always solvent, while in the mixed equilibrium, some banks can be internationally illiquid and default simultaneously. The latter equilibrium captures the basic features of banking crises after financial liberalization in emerging market economies. In this case, a large capital inflow leads to high asset-price volatility and magnifies a banking crisis. The effects of various public policies are also examined.

Based on the implementation of Shanghai-Hong Kong Stock Connect in China, this paper examines the effects of financial liberalization on stock market comovement using both multifractal detrended fluctuation analysis (MF-DFA) and multifractal detrended cross-correlation analysis (MF-DCCA) methods. Results based on MF-DFA confirm the multifractality of Shanghai and Hong Kong stock markets, and the market efficiency of Shanghai stock market increased after the implementation of this connect program. Besides, analysis based on MF-DCCA has verified the existence of persistent cross-correlation between Shanghai and Hong Kong stock markets, and the cross-correlation gets stronger after the launch of this liberalization program. Finally, we find that fat-tail distribution is the main source of multifractality in the cross-correlations before the stock connect program, while long-range correlation contributes to the multifractality after this program.

This paper provides systematic analysis of the empirical literature about the relation between financial liberalization and banking crises by conducting a meta-analysis. To our knowledge, this is the first study based on a meta-analysis as a tool to identify banking crises’ origins, especially financial liberalization effect. We are interested in explaining heterogeneity of results reported in previous empirical works by investigating the importance of specific characteristics of studies, data, methodology and accounting for model uncertainty. Our contribution resides in the use of the Bayesian Model Averaging approach to determine potential explanatory factors of earlier finding discrepancies. We find that the sample size plays an important role in explaining divergences in previous results, and that the use of multidimensional measures in developing countries tends to reduce significantly the link between financial liberalization and banking crises. Furthermore, we find that some estimation techniques deliver results systematically different from those obtained via other methods. For example, the use of logit approach results in substantially important estimates of the relationship.

Several financial and banking sector reform programs were instituted in different countries over the last three decades. The underlining purpose of these reforms was largely to improve banking sector supervision and regulation, introduce bank privatization mechanism, introduce clearance and settlement systems, infuse competition and to stimulate financial innovation. The objectives of this study are to 1) review the relevant published literature and market survey reports on the financial & banking sector reforms undertaken in Pakistan and elsewhere, 2) analyze how these reform programs develop digital banking culture and increase financial inclusion in the country and 3) guide future research by putting forward a research agenda. The findings of the study suggest a link between the financial and banking sector reforms and the stimulation of financial innovation; the promotion of digital banking culture; and the infusion of financial inclusion in Pakistan. We discuss managerial/policy implications of the study, limitations and presents recommendations for future research. peerReviewed

Arabic Abstract: إنه العام الثامن للأزمة السورية (الحرب على سورية)، الذي ظهرت فيه بوادر انتهائها وأصبحنا بحاجة ماسة لتطبيق خطة تعاف وإنعاش على جميع الأصعدة، ليس فقط كي نعوض الأضرار والخسائر لجميع الأطراف المعنية؛ بل من أجل استدراك وتعويض جميع ما فاتنا من مسيرة الإصلاح والتطوير التي كنا نخطوها خلال السنوات السابقة للأزمة. ولا شك في أن هذا يتطلب إعداد استراتيجية شاملة لإعادة إعمار سورية متضمنة البنى المعمارية والبنى الاقتصادية وحتى الاجتماعية من قبل إدارة متخصصة تعمل ضمن إطار بيئة تشريعية وقانونية سليمة، تتناسب وتنسجم مع دستور البلاد المتفق عليه، بحيث تستطيع مواجهة تحديات الفترة القادمة بكل أبعادها، وخصوصا التحديات المالية المتمثلة بإيجاد المصادر التمويلية اللازمة لنجاح الاستراتيجية المنشودة. وتكمن خطورة هذه التحديات في القرارات المالية وأسلوب اختيار كل مصدر تمويلي، بحيث يجب أن ينسجم مع مشاريع استراتيجية إعادة الإعمار الشاملة لبناء سورية ذات الاكتفاء الذاتي من جديد، ويحافظ على ثقافتنا وهويتنا ويعمل على تقوية وبناء المجتمع، وتزيد من فاعليته وتكامله. تناول هذا البحث تحليل للأوضاع الاقتصادية والمالية الحالية بهدف الوصول إلى توصيف للواقع الاقتصادي والمالي في سورية. وتم تسليط الضوء على بعض الجوانب في سبيل تصويب السياسات الحالية واتخاذ القرارات المناسبة للمرحلة القادمة من إعادة الإعمار وإيجاد مصادر التمويل المثلى له، وذلك من خلال الاستفادة من تجارب دول عانت من أزمات مشابهة احتاجت لمصادر تمويل عمليات إعادة الإعمار فيها. خلصت نتائج البحث إلى أن النظام المالي في سورية، غير قادر على تمويل ما دمرته سنوات الأزمة في بلد نام ، وأنه لا بد من البحث عن مصادر تمويل خارجية إلى جانب مصادر التمويل المحلية التي تحتاج إلى إعادة هيكلة تتناسب مع المتطلبات المرحلية، بالإضافة لاتخاذ الإجراءات التي تدعم خطوات التحرير المالي والانفتاح على الأسواق العالمية، وجذب المستثمرين بشكل مدروس، ويمكن بدء هذه الخطوات من خلال إنشاء سوق OTC يتيح أدوات تمويلية جديدة، ومن ثم البدء ببناء علاقات متوازنة ومدروسة مبنية على أسس وقواعد اجتماعية وسياسية وتنموية شاملة، عمادها الاتفاقيات والشراكات ذات المصلحة المشتركة وعقود BOT، تكون مؤطرة ضمن إطار من التشريعات المتطورة والمرنة، التي تتيح استخدام مختلف أدوات السياسة النقدية والمالية وغيرها من الأدوات بطريقة حكيمة وسليمة من قبل الحكومة، وكل هذا يحتاج لشرط أساسي وهو تحقيق الأمن والاستقرار في سورية. English Abstract: An “End” seems to be now reviled, after eight years of the Syrian crisis, a deep need for a comprehensive plan to heal the Syria’s wounds and to apply a full recovery to each and every aspect of life… more important is to catch up and accomplish a complete restitution of the lost effort during the crisis. One can say that; a comprehensive strategy is a vital key to reconstruct Syria also, to establish and raise the architectural, social and economic structure. A specialized committee should work hard to affirm and apply this strategy in a legislative and legal framework that fits the constitution and solidify the strategy to face all the coming challenges, especially when looking for the right resources to finance this plan in a way that guarantees preserving our national identity and a self-sufficient stable economy. This research was meant to study and analyze the economical and financial situation in Syria to bring a realistic accurate view. Which will lead to straight correction in the politics and procedures for the next phase of reconstructing; and will also help finding the best resources as well. (We can benefit the history of some countries in reconstructing after a hard-long war). The study shows that Syria will have to look for an external resources along with internal ones (which itself needs to be reconstructed so it fits the current situation and the upcoming challenges). A set of procedures to support the financial liberalization and openness to global markets is a must to attract huge massive investments in an invincible way. OTC is one good example of the tools we can use... it can be established on a balanced, stable relation that comes in an advanced and flexible legislation framework. All above will only be possible in one primary condition… Achieving security and stability in Syria.

This paper empirically analyses the simultaneous impacts of structural reforms - trade liberalization, capital account liberalization, and financial liberalization - on inclusive growth using panel data for 17 APEC member economies covering years from 1970 to 2016. The results show that capital account liberalization and growth of market capitalization are positively associated with inclusive growth of APEC member economies, especially non-high-income member economies. Trade liberalization has a negative impact on inclusive growth only of the whole income group. We further find the robust evidence that the expansion of domestic credits provided by financial sectors had a negative impact on inclusive growth. These results give implications that governments of APEC member economies need to design trade policies in a way of expanding outcomes of trade liberalization in a more inclusive way and of increasing extensive margins of export sectors. In addition, they need to design policies to increase access to the financial sector for the poor and socially marginalized people.

This paper employs a stochastic growth model to study the impact of international financial liberalization on the share of productive government expenditure in GDP. Financial liberalization is specified to take the form of reducing the costs of both lending to, and borrowing from, abroad. This is shown to impinge on the economy through (i) its interaction with the volatility of returns to domestic capital, and (ii) the impact on agents’ allocation of their portfolio across domestic and foreign assets, and its effect on domestic activity. Reduced foreign lending costs tend to divert resources from the domestic economy, requiring the government to compensate by increasing the share of domestic output allocated to productive activity. Reducing borrowing costs have the opposite effects. Empirical evidence, using a dataset of 97 countries over the period 1970 to 2015 provides convincing support for these findings and the underlying mechanism.

Mainland Chinese government employs two related strategies to protect its national and economic interests in the process of financial liberalization. It grants government protection to industries of national interest. In addition, it also maintains political-linkage with certain firms to assert their influence. We term these firms as strategic firms. We argue these strategic firms with economic and national interests demonstrate better performance and higher management turnovers. Management turnovers are less frequent if the chairpersons and CEOs are politically-connected. The strategic firms also rebound better from financial distress than non-strategic firms.

This paper investigates the impacts of globalization, political institutions, and financial liberalization on the performance and risk-taking of insurance firms covering 1324 individual firms in 30 selected OECD countries. We find that greater globalization and a stable political institution lead insurance companies to exhibit a better performance—i.e., insurers adjust their strategies while being aware of institutional changes. By contrast, financial liberalization has an inverse impact on insurance company performance. Thus, greater globalization and a stable political environment both drive less risk-taking for insurers. These findings are particularly important to insurance markets’ competitors and national policymakers.

Using DCC, ADCC and GO-GARCH models, this paper examines whether the Shanghai-Hong Kong Stock Connect program drives market comovement between Shanghai and Hong Kong. We distinguish financial liberalization induced market comovement from that induced by other factors through comparing time-varying market correlations of Shanghai-Hong Kong with those of Shenzhen-Hong Kong. The results of the three variants of multivariate GARCH models consistently show that, if we ignore the period of market crash, the market correlation between Shanghai and Hong Kong does not significantly increase after the launch of the program. Furthermore, inconsistent with theoretical prediction, we find that the correlation between Hong Kong and financially non-liberalized Shenzhen market increases much more than that between Hong Kong and financially liberalized Shanghai market in the market turbulence. The results implicate the Shanghai-Hong Kong Stock Connect program is not the main fundamental force that drives market comovement between Shanghai and Hong Kong in the short run. This finding is further supported by the results of optimal hedge ratios and downside risk measures, which hold important risk management implications for investors in these markets.

Occasional crises have been shown to be part of growth enhancing mechanism (see Ranciere, Tornell and Westermann, 2008). In this paper, we document that neither the stereotypical case study of India vs. Thailand, nor the benchmark growth-regression in this earlier research support this result anymore when updating the sample by one decade that includes the Global Financial Crisis, 2007/8. We analyze the time-varying nature of this relationship in rolling regressions and an historical dataset. In the subset of countries with enforceability problems, we find that the link between occasional crisis, measured by the negative skewness of credit growth, and per-capita output growth still remains intact.

This paper examines the effect of financial liberalization on the financial stability of an economy using changes in sovereign credit ratings as the measure of financial stability. Using a panel dataset from 1970 to 2014, comprising of all the countries rated by Standard and Poor’s, Moody’s or Fitch, we employ system generalized method of moment approach to estimate the model. We reject the hypothesis that financial stability is independent of financial liberalization. Our results indicate a positive and significant impact of financial liberalization on financial stability. Furthermore, we find that sovereign ratings tend to be stable. Our results remain robust to a number of modifications in sample composition and changes in the period of analysis.

This paper explores the extent to which financial liberalization in the euro area had a differentiated impact on members’ private consumption patterns and in turn on their current account positions as a function of who got indebted in the first place. Theoretically, it builds on an inter-temporal consumption model augmented with household heterogeneity. Low/middle income groups are impatient and credit-constrained, whilst high-income groups are patient and under no constraint. Increased access to credit in previously financially repressed countries implies a relaxation of collateral constraints specifically for low-income groups, who differently from high-income agents borrow to finance current consumption. It follows that financial liberalization is associated with deteriorating external positions there where initial levels of financial openness and inclusion are lowest and the share of the low/middle-income group largest.

1. Introduction 2. Proliferation of NBFIs: A Precursor to the 1997 Financial Crisis 3. Role of NBFIs in the 1997 Financial Crisis 4. Financial Supervision: Before and After the Crisis 4.1 Credit Card Crisis: Haphazard Deregulation and Weak Financial Supervision 4.2 Mutual Savings Bank Crisis in 2011: A Replay of Previous Crises 5. Financial Development and Inadequate Financial Supervision

We construct an overlapping generations model in which people are subject to limited pledgeability and uncertainty over entrepreneurial projects. We show that whether financial liberalization generates a poverty trap, an endogenous fluctuation, or both depends on the interaction of pledgeability and uncertainty. Endogenous fluctuation requires a high level of both pledgeability and uncertainty. Poverty trap requires a low level of both. For an intermediate level of both, the initially poor are trapped in poverty while the initially rich fluctuate endogenously.

Using the daily return indexes of 39 industries obtained from DataStream database during 3 January 2000–31 May 2011 of the world stock markets and the multi-factor R-squared approach, we derive a normalized index to analyze the impact of China’s financial liberalization on its stock market interdependence with the world. It is found that China’s financial market reforms after its WTO accession have significantly enhanced market interdependence.

This paper investigates the impact of the financial integration process on economic growth. Specifically, in analysing such growth effects, the distinction is made between two growth channels—investment and productivity. Crucially, the analysis tests whether the effects of financial openness on services differ from its effects on manufacturing. Based on a panel of sector-level data (manufacturing and services) from the EU KLEMS database (1980–2009), such effects are estimated in a dynamic panel setting. The main findings suggest that the productivity effects of financial integration, although positive overall, are uneven and they differ between the manufacturing and service sectors. More precisely, the results confirm that the manufacturing sector could profit from the process of global financial integration to a greater extent than services. But the impact of financial globalization on service sectors productivity remains overall positive. On the contrary, capital accumulation was broadly unaffected. Such results remain robust to different sensitivity checks regarding, most importantly, the measurement of financial integration. The findings of the lower productivity impact in services can be understood considering their more intensive skill-biased direction of technological change. At the same time, the strong capital-skills complementarity in services sustained the generation of positive expectations over future productivity growth and attracted financial resources from abroad. As an implication of this research and given the increasing importance of service sectors to modern economic systems, the focus should be placed on searching for more precise channels of long-lasting growth in services. (JEL: F02, F21, F36, F4)

Using a theoretical model that incorporates asymmetric information and differing comparative advantages among lenders, this paper analyzes the impact of lender entry on credit access and aggregate net output. The model shows that lender entry has the potential to create a segmented market that increases credit access for those firms targeted by the new lenders but potentially reduces credit access for all other firms. The overall impact on net output depends on the distribution of firms, the relative costs of lenders, and the cost of acquiring information. The model provides new insights into the evidence regarding foreign lenders' entry into emerging markets.

This paper attempts to shed some light on the role of financial sector policies in generating new knowledge, drawing on the experience of one of the fastest growing and largest developing countries. Using time series data for India over the period 1963–2005, the results indicate that interest rate restraints help generate ideas. Other financial repressionist policies, in the form of high reserve and liquidity requirements, as well as significant directed credit controls, appear to have a dampening effect on ideas production. These results lend some support to the argument that some form of financial sector reforms may help stimulate economic growth via increasing technological innovation.

This paper examines whether the effect of financial liberalization on economic growth depends on reform complementarities. A non-linear growth regression specification that interacts a proxy of financial liberalization with proxies of reform complementarities is estimated using a panel of 45 Sub-Saharan Africa (SSA) countries. The cross-country, panel-data evidence shows no clear relationship between financial liberalization and growth. The study however finds that financial liberalization is more likely to positively and significantly increase growth across the SSA region if the following complementary reforms are undertaken e.g. improvement in educational attainment, macroeconomic and external stability, and overall governance.

We study the relation between institutionalization of capital and the reliance on public markets by corporations and investors. Country-level evidence indicates that capital under institutional management (ownership by mutual funds, pension funds, and insurance companies) is negatively related to the levels and growth rates of numbers of publicly listed companies and also negatively related to the levels and growth rates of aggregate market capitalization and trading activity on public equity markets. The results indicate that, as economies mature and direct ownership of equity by retail investors declines, financial systems move in the direction of being less public market-centric to more institution-centric.

Turkish Abstract: Bu calismada finansal serbestlesme sonrasi donemde kisa vadeli sermaye akimlarinin, Turk ekonomisinde gozlemlenen iktisadi dalgalanmalar uzerindeki etkileri arastirilmaktadir. Calismada sermaye hareketlerinin etkilerine yonelik kuramsal aciklamalar ele alindiktan sonra, bu kuramlarin ortaya koydugu reel doviz kuru mekanizmasi Uzun Donem Kisitli Yapisal Vektor Otoregresyon (SVAR) modeli ile analiz edilmektedir. Turkiye’nin 1992:Q1- 2007:Q3 ucer aylik verileri cercevesinde yapilan analizde, kisa vadeli sermaye akimlarinin reel kur araciligiyla ekonominin reel kesiminde onemli dalgalanmalara neden oldugu saptanmistir. English Abstract: In this study, effects of short-run capital flows after the time of financial liberalization on the observed business cycles in Turkish Economy have been discussed. In the study, after theoretical approaches on the effects of capital flows had been mentioned, real exchange mechanism which is explained in the related theoretical approaches has been analyzed with a Long-run Restricted Structural Vector Autoregression (SVAR) model. The quarterly data of Turkish Economy included a period of 1992:Q1 to 2007:Q3 have been used in the empirical model. Results of the empirical work show that short-run capital flows by exchange rate cause importantly cycles on real part of economy.

This paper tries to quantify the financing needs in the Belt and Road countries and industries by using firm-level data from 2009 to 2014. By examining financial constraints of firms in the Belt and Road countries, this study constructs a Financing Needs Index for Belt and Road countries and highlights the characteristics of financing needs across 36 countries, 80 industries and 6 years. By further incorporating information from World Bank Enterprise Surveys, this paper builds an Augmented Financing Needs Index for 56 Belt and Road countries. The findings of this paper show that countries can achieve higher economic growth by further financial liberalization, improving business climate and institutional quality to address the financing needs of their indigenous firms.

In an imperfect capital market, external funds are more costly than internal funds. Firms face financial constraints and many studies suggest that firms’ investments depend on the availability of internal funds. Financial liberalization plays the role of relaxing financial constraints on firms and thereby reduces the sensitivity of investments to cash flow. In addition to examining whether financial liberalization affects firms’ investment behavior, an innovative approach explores the role of real estate as collateral and addresses a potential censoring problem. Using panel data on Tunisian firms, we find that cash flow effects on investment decrease as financial markets are liberalized. In particular, “Pulp, Paper and Cardboard” industry firms are found to gain most from liberalization. However, possessing real estate is important in a firm's investment behavior but decreases with financial liberalization.

The proposed income distribution effect of financial liberalization has gradually attracted the attention of academic economists, but the research results are inconsistent and even contradictory. This paper presents a quantitative review of these studies. The objectives are to assess the impact of financial liberalization on income inequality and to identify the sources of heterogeneity. A meta-analysis is performed with 23 empirical cross-country studies on the relationship between financial liberalization and income inequality, yielding a total of 556 estimates. We find overall support for the small negative relationship between financial liberalization and income inequality when considering potential publication bias and method heterogeneity. Our results suggest that different impact channels, institutional quality, the measurement used for financial liberalization and income inequality, and the use of different econometric methods are especially effective for explaining the differences in past study findings.

This paper aims to assess the impact of financial liberalization on the degree of informational efficiency in emerging stock markets while considering three types of financial crises, i.e. banking, currency and twin crises. To this end, a treatment effects model with time-varying parameters is estimated for 13 emerging economies from January 1986 to December 2008. Empirical results show that there is a greater efficiency in recent years and that financial liberalization not only improves the degree of efficiency but also reduces the probability of financial crises. They also suggest that improving efficiency depends upon several internal characteristics.

This article describes the financial liberalization process in Taiwan and evaluates the effects of foreign institutional investors on Taiwan's stock market. Gradual liberalization allowed Taiwan to reap the benefits while reducing the harmful impacts of foreign participation during the Asian financial crisis. Overall, the liberalization policies proved to be effective as the stock market has become more stable and efficient. Foreign institutional investors contribute significant growth to the Taiwan stock market, and will continue to play a sizeable role in its future development.

In the present contribution, I concentrate on the process of financial liberalization in a specific context of European economic and monetary integration. I implement de facto and de jure measures of financial liberalization and find that formal aspects of financial openness generate a strongly positive impact on economic growth and its sources, productivity growth and capital accumulation. Moreover, there is evidence of a positive contribution to the process stemming from the EU membership, while no substantial effect comes from the euro adoption. Finally, I investigate the effects from financial integration on country groups within the EU.

We examine the development of open macroeconomic policy choices among developing economies from the perspective of the powerful “trilemma” hypothesis. We construct an index of divergence of the three trilemma policy choices, and evaluate its patterns in recent decades. We find that the three dimensions of the trilemma configurations are converging toward a “middle ground” among emerging market economies, equipped with managed exchange rate flexibility, underpinned by sizable holdings of international reserves, and intermediate levels of monetary independence and financial integration. We also find emerging market economies with more converged policy choices tend to experience smaller output volatility in the last two decades. Emerging markets with relatively low international reserves/GDP could experience higher levels of output volatility when they choose a policy combination with a greater degree of policy divergence while this heightened output volatility effect does not apply to economies with relatively high international reserves/GDP holding.

A successful implementation of an overall reform program will enable Georgian banks to provide intermediation and assist in the country's development from a weak market economy to a mature financial system. The changes for reform are better now than at any time during the last decade. Favorable economic and political conditions and changes in attitude among bank management have created an usual opportunities for development and growth. This study attempts to analyze the effects of financial liberalization and deregulation on competitive conditions and foreign investment in the banking industry of Georgia economies using firm-level data for the period 1999- 2010.

Bumann and Lensink (2016) suggest that the impact of financial liberalization on inequality is conditioned by financial development. Besides presenting a theoretical model that explains the underlying channels, they report empirical results in which capital account liberalisation (as a relatively narrow measure of financial liberalisation) only tends to lower income inequality if the level of financial depth is high enough.

In the process of financial liberalization, the commercial banks in Vietnam are under highly competitive pressure from foreign banks. This study aims to analyze the influences of foreign bank presence on the technical efficiency of the domestic commercial banks. The study uses the two-step method to analyze the data sample of 42 domestic banks, 5 foreign banks, and 5 joint-venture banks during the period of 1992-2013. The result indicates that the presence of foreign banks put positive impacts on the technical efficiency of the domestic banks.

This paper investigates the dual role of financial liberalization on growth using a bank crisis model and a growth model. It applies panel econometric techniques on data covering 34 countries in Sub-Saharan Africa over the period 1983–2008. The results indicate that the growth retarding effects of financial liberalization, are dominant over growth enhancing effects, which show mixed results. The results also indicate that institutional variables, human capital formation and foreign aid are key factors in explaining growth in Sub-Saharan Africa. The study therefore recommends adoption of a ‘managed financial openness’ policy and institutional reform measures.

Using the degree of accessibility of foreign investors to emerging stock markets, or investibility, as a proxy for the extent of foreign investments, we assess whether investibility has a significant influence on the diffusion of global market information across stocks in emerging markets. We show that greater investibility reduces price delay to global market information where the price delay is measured as the proportion of stock returns explained by the lagged world market returns in the regression of stock returns on contemporaneous and lagged world and local market returns. We also find that returns of highly investible stocks lead those of non-investible stocks because they incorporate global information more quickly. These results are consistent with the idea that financial liberalization in the form of greater investibility yields informationally more efficient stock prices in emerging markets.

Aşağıda künyesi bulunan makalenin RePec'te de kayıtlı çalışma raporu sürümü:A. Yasemin Yalta & A. Talha Yalta "Does Financial Liberalization Decrease Capital Flight? A Panel Causality Analysis," International Review of Economics and Finance, 22 (1), 92 – 100, 2012, TOBB University of Economics and Technology, Department of Economics, http://ideas.repec.org/s/tob/wpaper.html . Working Papers Series number 1102. JEL Codes: F32, F39, C23, We employ a panel causality approach in order to examine whether financial liberalization affects the magnitude of capital flight, which measures unrecorded accumulation of foreign assets by the private sector. Our data from 21 emerging market economies for the period between 1980 and 2004 show no significant evidence of a causal relationship. Lagged values of capital flight, however, seem to increase its current level, indicating its self-reinforcing characteristic. Our results suggest that financial liberalization policies per se may not be helpful in reducing capital flight.(This abstract was borrowed from another version of this item.)(http://ideas.repec.org/p/tob/wpaper/1102.html#download)

This paper studies the impact of financial liberalization on economic growth. It contributes to this literature by using an innovative econometric methodology and a unique data set of historical series. It presents power ARCH estimates for Argentina for the period from 1896 to 2000. The main results show that the long-run effect of financial liberalization on economic growth is positive while the short-run effect is negative, albeit substantially smaller. Interestingly, we find that financial development affects growth only directly, that is, not through growth volatility.

Delicate and difficult at the same time, financial and monetary fields have always attracted attention of researchers worldwide. One of the challenges of contemporary capitalism, financial liberalization, is a process that can bring enormous benefit, but it can pose serious obstacles to development and economic prosperity. In this paper, we propose to analyze the impact of liberalization on bankin g system from emerging countries. The necessity to study and knowledge both the process itself and its effects on financial markets came as a result of a small number of studies and the inconclusive results regarding the impact of financial liberalization on developing countries in Central and Eastern Europe. Than rejected, financial liberalization must be accompanied by an increase in prudential policy. Too rapid liberalization in a country does not mean speed problems in an absolute sense, but in a relative sense: in many cases instability occurred because of the difference between impressive speeds of financial liberalization and very slow adjustment of the prudential provisions, banking and financial regulations, respectively monetary policy actions.

It has been suggested that financial liberalization may be a key policy to promote industrialization as it removes the credit access constraint on firms, especially small and medium ones. We investigate the effect of credit expansion in the wake of liberalization on the structure of the industrial sectors in Malawi and find that, in contrast to the hypothesis above, it resulted in an increase in industrial concentration and a decrease in net firm entry, especially in sectors that are more finance dependent. The case of Malawi is interesting because financial liberalization has been justified precisely as a means for industrial development and because the implementation of the policy has been regarded as relatively successful.

The main objective of this paper is to explore the determinants of private consumption growth volatility in India, focusing on the role of financial sector policies. Using data for India over the period 1950–2005, the results show that the implementation of financial repressionist policies is strongly associated with lower consumption volatility. The results remain robust after controlling for a wide range of macroeconomic shocks and variables. The presence of a threshold effect implies that the benefits of financial reforms in reducing consumption volatility can only be reaped when the financial system becomes sufficiently liberalized. The results also indicate that the presence of a more open financial system may serve to dampen fluctuations in private consumption.

This paper focuses on examining the effects of financial development and liberalization on knowledge accumulation. The results consistently show that while financial development facilitates the accumulation of new ideas, the implementation of financial reform policies is negatively associated with it. The undesirable effects of financial liberalization are found to operate through the triggering of crises and volatility in the financial system. There is also evidence supporting the hypothesis that financial liberalization reallocates talent from the innovative sector to the financial system, thus retarding technological deepening. Moreover, the findings also suggest that increased R&D activity and the presence of a stronger intellectual property rights protection framework tend to have beneficial effects on knowledge accumulation.

This paper analyzes the roles of credit market conditions in endogenous formation of housing-market boom–bust cycles in a business cycle model. When households are uncertain about the duration of a temporary high income growth period, expected future house prices rise during the high growth period and fall at the end of the period. But this development causes expectation-driven boom–bust cycles in current house prices only if the economy is open to international capital flows. It is also shown that high maximum loan-to-value ratios for residential mortgages per se do not cause boom–bust cycles without international capital flows in the model.

We examine if the sequence of stock market liberalization events matters for corporate financing choices. We contrast firms who attain ‘investable’ status through domestic reforms with those who do so by issuing American Depository Receipt programs. We find that the first liberalization event prompts similar corporate responses regardless of the path followed. However, we find differential effects between firms who issue ADRs after realizing financial liberalization and those who use ADR initiations to achieve this status. Here, the sequence matters and the capital structure choices of the two groups are very different.

Drawing on the recent developments in innovation-based growth models that emphasize the importance of financial factors and R&D activity, this paper explores the impact of research efforts and financial sector reforms on inventive activity, using Korea as the case study. Based on time series data over the period 1967–2005, the results consistently show that the implementation of a series of financial liberalization policies is strongly associated with a higher rate of knowledge generation. They also show that R&D intensity has a significant positive influence on ideas production, providing some support for the Schumpeterian endogenous growth framework.

Cataloged from PDF version of article. In this study, we address whether the degree of financial liberalization affects the aggregated total volatility of stock returns by considering the time-varying nature of financial liberalization. We also explore channels through which the degree of financial liberalization impacts aggregated total volatility. We document a negative relation to the degree of financial liberalization after controlling for size, liquidity, country, and crisis effects, especially for small and medium-sized markets. Moreover, the degree of financial liberalization transmits its negative impact on aggregated total volatility through aggregated idiosyncratic and local volatilities. Overall, our results provide evidence in favor of the view that the broadening of the investor base due to the increasing degree of financial liberalization causes a reduction in the total volatility of stock returns. 2009 Elsevier B.V. All rights reserved.

This paper examines the effects of financial and trade liberalization on growth volatility of real output and consumption in Africa. Our results suggest trade liberalization is associated with greater output and consumption growth volatility while financial liberalization increases the efficacy of consumption smoothing and stabilizes income and consumption growth. In addition, we find financial market depth and institutional quality operate jointly with trade and financial openness to reduce volatility in output and consumption growth. There is also evidence that good institutions which foster low inflation levels and volatility promote consumption and output growth stability.

This paper analyzes the effects of financial liberalization on growth and volatility at the industry level in a large sample of countries. We estimate the impact of liberalization on production, employment, firm entry, capital accumulation, and productivity, using both de facto and de jure measures of liberalization. In order to overcome omitted variables concerns, we employ a number of alternative difference-in-differences estimation strategies. We implement a propensity score matching algorithm to find a control group for each liberalizing country. In addition, we exploit variation in industry characteristics to obtain an alternative set of difference-in-differences estimates. Financial liberalization is found to have a positive effect on both growth and volatility of production across industries. The positive growth effect comes from increased entry of firms, higher capital accumulation, and an expansion in total employment. By contrast, we do not detect any effect of financial liberalization on measured productivity. Finally, the growth effects of liberalization appear temporary rather than permanent.