Related items
Showing items related by title, author, creator and subject.
-
Thresholds in the Process of International Financial IntegrationThe financial crisis has re-ignited the
 fierce debate about the merits of financial globalization
 and its implications for growth, especially for developing
 countries. The empirical literature has not been able to
 conclusively establish the presumed growth benefits of
 financial integration. Indeed, a new literature proposes
 that the indirect benefits of financial integration may be
 more important than the traditional financing channel
 emphasized in previous analyses. A major complication,
 however, is that there seem to be certain
 "threshold" levels of financial and institutional
 development that an economy needs to attain before it can
 derive the indirect benefits and reduce the risks of
 financial openness. This paper develops a unified empirical
 framework for characterizing such threshold conditions. The
 analysis finds that there are clearly identifiable
 thresholds in variables such as financial depth and
 institutional quality -- the cost-benefit trade-off from
 financial openness improves significantly once these
 threshold conditions are satisfied. The findings also show
 that the thresholds are lower for foreign direct investment
 and portfolio equity liabilities compared with those for
 debt liabilities.
-
Does Financial Openness Lead to Deeper Domestic Financial Markets?Advanced and emerging market economies
 have rapidly integrated into international capital markets
 and this growing globalization of financial markets has led
 to some important changes in the patterns of saving and
 investment across the world. The main goal of this paper is
 to test whether the cross-border asset trade has led to
 improvements in the intermediation of these savings -- that
 is, foster development of domestic financial markets. The
 authors have collected annual information on financial
 market development, financial openness, and other control
 variables for a sample of 145 countries for the period
 1974-2007. Controlling for the likely endogeneity of
 financial openness, the analysis finds that rising financial
 openness expands private credit, bank assets, and stock
 market and private bond market development, and generates
 efficiency gains in the banking system. However, the impact
 of financial openness on domestic financial development may
 depend on the level of institutional quality, the extent of
 investor protection, and the degree of trade openness. In
 general, rising financial openness will enlarge the size and
 activity of financial intermediaries, improve efficiency in
 the banking system, and contribute to deepen private bond
 markets in countries with moderate to high levels of
 institutional quality and investor protection as well as in
 countries with high trade openness.
-
Short-Run Pain, Long-Run Gain : The Effects of Financial LiberalizationThe authors examine the short- and
 long-run effects of financial liberalization on capital
 markets. To do so, they construct a new comprehensive
 chronology of financial liberalization in 28 developed and
 emerging economies since 1973. The authors also construct an
 algorithm to identify booms and busts in stock market
 prices. The results indicate that financial liberalization
 is followed by more pronounced boom-bust cycles in the short
 run. But financial liberalization leads to more stable
 markets in the long run. Finally, the authors analyze the
 sequencing of liberalization and institutional reforms to
 understand the contrasting short- and long-run effects of liberalization.