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The relationship between Financial liberalization, Financial Stability and Capital Control: Evidence from a multivariate framework for developing countries

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  • BOUKEF JLASSI, NABILA
  • Hamdi, Helmi

Abstract

We analyze the dynamic relationship between financial liberalization and financial stability for a panel of 25 developing countries during the period 1986-2010. The empirical study employs the Toda and Yamamoto's (1995) procedure to test for the Granger no-causality between the six variables of our study including: credit-to-GDP ratio, deposit to credit ratio, net interest margin , bank supervision, Liberalization measured by kaopen and capital control proxied by the Quinn index (2007). The results show a first bidirectional causal relationship between financial stability and deposit to credit ratio, a second one between financial stability and capital control and a third one between financial stability and liberalization.

Suggested Citation

  • BOUKEF JLASSI, NABILA & Hamdi, Helmi, 2015. "The relationship between Financial liberalization, Financial Stability and Capital Control: Evidence from a multivariate framework for developing countries," MPRA Paper 64328, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:64328
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    More about this item

    Keywords

    Liberalization; capital control; Developing countries; Toda and Yamamoto;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G0 - Financial Economics - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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