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Financial Liberalization, Crises, and Economic Growth
economic development, financial liberalization
Author Inkoo Lee, Jonghyup Shin Series 07-02 Language English Date 2007.10.30
It has been widely recognized that financial liberalization plays an important role in economic development. Although an expanding body of literature has documented this effect across space and time, the channel through which financial liberalization affects the economic growth remains unclear. This paper employs probit and panel regressions to show that financial liberalization is positively associated with economic growth, with the (positive) direct liberalization effect dominating the (negative) indirect crisis effect. Financial liberalization is expected to increase GDP growth by 0.92 percentage point in the whole sample and by 0.99 percentage point in crisis experienced countries, respectively. Financial liberalization contributes to economic growth even when the sample is restricted to countries that experienced financial crises. (The rest is omitted.)
I. Introduction
II. The Empirical Model
1. The Benchmark Regression Model
2. The Alternative Model
3. Data
III. The Results
1. Financial Liberalization and Crises
2. Financial Liberalization and Economic Growth
3. Financial Liberalization, Crises and Economic Growth
4. Financial Liberalization, Crises and Interest Rates
IV. Conclusions
References
Appendix
II. The Empirical Model
1. The Benchmark Regression Model
2. The Alternative Model
3. Data
III. The Results
1. Financial Liberalization and Crises
2. Financial Liberalization and Economic Growth
3. Financial Liberalization, Crises and Economic Growth
4. Financial Liberalization, Crises and Interest Rates
IV. Conclusions
References
Appendix
Sales Info
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