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Did Globalisation Influence Credit Market Deregulation?

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  • Peter Eppinger
  • Niklas Potrafke

Abstract

We investigate whether globalization influenced credit market deregulation over the period 1970-2010. Globalization is measured by the KOF indices of globalization. Credit market deregulation is measured by the credit market freedom indicators of the Fraser Institute. The results from both cross-sectional and panel regressions using ordinary least squares indicate a positive correlation between globalization and credit market deregulation. We account for reverse causality by using predicted trade openness as an instrumental variable and show that this approach gives rise to different conclusions. Two-stage least squares estimations do not show that globalization had a causal influence on credit market deregulation.
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  • Peter Eppinger & Niklas Potrafke, 2016. "Did Globalisation Influence Credit Market Deregulation?," The World Economy, Wiley Blackwell, vol. 39(3), pages 426-443, March.
    • Handle: RePEc:bla:worlde:v:39:y:2016:i:3:p:426-443
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    Cited by:

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    2. Balli, Faruk & Pericoli, Filippo M. & Pierucci, Eleonora, 2018. "Globalization and international risk-sharing: The role of social and political integration," European Journal of Political Economy, Elsevier, vol. 55(C), pages 324-345.
    3. Giray Gozgor & Priya Ranjan, 2017. "Globalisation, inequality and redistribution: Theory and evidence," The World Economy, Wiley Blackwell, vol. 40(12), pages 2704-2751, December.
    4. Brian Chi-ang Lin & Siqi Zheng & Maoliang Bu & Chin-Te Lin & Bing Zhang, 2016. "Globalization And Climate Change: New Empirical Panel Data Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 30(3), pages 577-595, July.
    5. Batten, Jonathan A. & Bilgin, Mehmet Huseyin & Demir, Ender & Gozgor, Giray, 2023. "Does globalization affect credit market controls?," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 21-43.
    6. Farah Amir, 2020. "Role of Financial Development in Economic Globalization: Evidence from Six Developing Countries," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 10(1), pages 26-33.
    7. Niklas Potrafke, 2019. "The globalisation–welfare state nexus: Evidence from Asia," The World Economy, Wiley Blackwell, vol. 42(3), pages 959-974, March.
    8. Sabine Deij & Jakob B. Madsen & Laura Puzzello, 2021. "When are instruments generated from geographic characteristics in bilateral relationships invalid?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(4), pages 437-452, June.
    9. Edward Anderson & Samuel Obeng, 2021. "Globalisation and government spending: Evidence for the ‘hyper‐globalisation’ of the 1990s and 2000s," The World Economy, Wiley Blackwell, vol. 44(5), pages 1144-1176, May.
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    More about this item

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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