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Financial liberalization and the onset of financial crisis in Western European states between 1983 and 2011: An econometric investigation

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  • Eichacker, Nina

Abstract

This paper argues that financial liberalization played a significant role in destabilizing Western European economies since the financial crisis of 2008. This process owes much to changes in the financial governance of Western Europe in the late 20th century. This contrasts with the conventional story that the Eurocrisis is primarily due to peripheral countries’ excessive government spending or the German government's neo-mercantilist policies. The paper shows a robust and statistically significant positive correlation between gross locational capital flows over GDP and the onset of financial crisis, using linear probability models and logit regressions, providing evidence for the hypotheses.

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  • Eichacker, Nina, 2015. "Financial liberalization and the onset of financial crisis in Western European states between 1983 and 2011: An econometric investigation," The North American Journal of Economics and Finance, Elsevier, vol. 34(C), pages 323-343.
    • Handle: RePEc:eee:ecofin:v:34:y:2015:i:c:p:323-343
    DOI: 10.1016/j.najef.2015.09.017
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    3. Del Brio, Esther B. & Mora-Valencia, Andrés & Perote, Javier, 2017. "The kidnapping of Europe: High-order moments' transmission between developed and emerging markets," Emerging Markets Review, Elsevier, vol. 31(C), pages 96-115.
    4. Detzer, Daniel, 2019. "Financialization made in Germany: A review," IPE Working Papers 122/2019, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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