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Financial Liberalization, Bank Crises and Growth: Assessing the links

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  • Alessandra Bonfiglioli
  • Caterina Mendicino

Abstract

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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  • Alessandra Bonfiglioli & Caterina Mendicino, 2005. "Financial Liberalization, Bank Crises and Growth: Assessing the links," Departmental Working Papers of Economics - University 'Roma Tre' 0044, Department of Economics - University Roma Tre.
    • Handle: RePEc:rtr:wpaper:0044
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    More about this item

    Keywords

    Capital account liberalization; equity market liberalization; financial development; institutions; dynamic panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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