Does Financial Liberalization Spur Growth?

Bekaert, Geert; Harvey, Campbell R.; Lundblad, Christian

doi:10.3386/w8245

Cited by 333 publications

(361 citation statements)

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“…Mainstream economists believed that deregulating restrictions on international capital flows would improve efficiency in local financial markets through, for example, increased competition of foreign banks in domestic financial markets of developing economies (Levine, 2004) or foreign participants in domestic equity markets (Bekaert, Harvey & Lundblad, 2005). Increased efficiency should result in better allocation of resources and higher growth.…”

Section: Financialisation In Emerging Economies: a Literature Reviewmentioning

confidence: 99%

Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies

Karwowski

Stockhammer

2017

Economic and Political Studies

114

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Financialisation research has originally focussed on the US experience, but the concept is now increasingly applied to emerging economies (EMEs). There is a rich literature stressing peculiarities of individual country experiences, but little systematic comparison across EMEs. This paper fills this gap, providing an overview of the debate and identifying six financialisation interpretations for EMEs. These different interpretations stress (1) financial deregulation (2) foreign financial inflows, (3) asset price volatility, (4) the shift from bankbased to market-based finance, (5) business debt, and (6) household indebtedness. We construct and compare measures of the six financialisation interpretations across a sample of 17 EMEs from Latin America, emerging Europe, Africa and Asia, contrasting them with the US and UK, two financialised economies. We find considerable variation in financialisation experiences of EMEs. Asset price volatility is found across continents. Asia has been more exposed to capital inflows, stock markets have gained importance and private sector debt risen. In emerging Europe financial deregulation has been more pronounced with lower levels but strong increases in household debt. The picture is similar in South Africa, the African EME in the sample, where household debt is comparatively high. Financialisation in Latin America is weaker according to our measures.Keywords: Financialisation; Emerging markets; Financial instability; Asset price volatility; Heterodox economics JEL codes: F30; F34; G01; G12; G15; B50 Acknowledgements: We would like to thank our colleague Rex McKenzie for comments on the paper. The usual disclaimers apply.

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Section: Financialisation In Emerging Economies: a Literature Reviewmentioning

confidence: 99%

Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies

Karwowski

Stockhammer

2017

Economic and Political Studies

114

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“…At the very least, I can conclude that the baseline estimation results are not subject to obvious simultaneity issues (as in Bekaert, et al, 2001). …”

Section: Reverse Causality?mentioning

confidence: 99%

“…IMF (2001, Chapter 4) surveys both the growth and finance, and finance and liberalization literatures. For the most recent review on finance and growth, refer to Quinn, et al (2002) 4 See Shultz (1999), Henry (2000), and Bekaert et al(2000Bekaert et al( , 2001.…”

Section: Introductionmentioning

confidence: 99%

Financial development and financial liberalization in Asia: Thresholds, institutions and the sequence of liberalization

Ito

2006

The North American Journal of Economics and Finance

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I investigate whether financial openness leads to financial development after controlling for the level of legal/institutional development, and whether trade opening is a precondition for financial opening, focusing on Asia. Utilizing a panel encompassing 87 less developed countries over the period 1980 to 2000, I find that a higher level of financial openness spurs equity market development only if a threshold level of legal development has been attained, a condition prevalent particularly among emerging market Asian countries. On the issue of sequencing, trade openness is found to be a prerequisite for successful inducement of financial development via capital account liberalization.JEL Classification: F36, F43, G28

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“…These studies include: Levine and Zervos (1996), Caporale et al (2003), Bekaert et al (2005), Adjasi and Biekpe (2006), Nurudeen (2009), Akinlo and Akinlo (2009), Ujunwa and Salami (2010) and Bernard and Austin (2011). All these studies have found that market-based financial development has a positive impact on economic growth, except for studies by Ujunwa and Salami (2010) and Bernard and Austin (2011) that found the relationship between market-based financial development and economic growth to be positive in some countries but also negative in other counties.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Bank-Based and Market-Based Financial Development on Economic Growth: Time-Series Evidence From the United Kingdom

Nyasha

Odhiambo

2016

Glob. Econ. J.

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Does Financial Liberalization Spur Growth?

Cited by 333 publications

References 0 publications

Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies

Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies

Financial development and financial liberalization in Asia: Thresholds, institutions and the sequence of liberalization

The Impact of Bank-Based and Market-Based Financial Development on Economic Growth: Time-Series Evidence From the United Kingdom

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