Financial Development, Financial Openness, and Economic Growth

Abstract

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What Interactions between Financial Globalization and Instability?—Growth in Developing Countries

“…Recently, Estrada et al . () found that financial development increases economic growth in developing countries but that this effect is lower in developed ones. Conversely, the authors argue that the direct positive impact of financial globalization on output is stronger in advanced economies than in less developed economies.…”

“…These variables are also used by the recent empirical literature on financial globalization and financial development (see, e.g. Aghion et al ., ; Neto & Veiga, ; Estrada et al ., ; Ahmed, ; Trabelsi & Cherif, ).…”

“…In search of an answer to this problem, a new point of view on the subject has emerged. It assumes that to a larger extent than the direct effects, financial globalization leads to spillover effects (indirect effects) that impact indirectly on economic growth and that by acting primarily in the development of domestic financial system (Masten, Coricelli, & Masten, ; Estrada, Park, & Ramayandi, Ahmed, ; Trabelsi & Cherif, ).…”

“…Our study makes three main contributions to the literature. First, it goes beyond the recent literature on the tripartite relationship between financial globalization, financial development and economic growth in developing countries (Estrada et al ., ; Ahmed, ; Trabelsi & Cherif, ). In fact, this literature does not take into account the effect of the irregularity of financial development, namely, financial instability.…”

Mediating Effects of Cohesion Policy and Institutional Quality on Convergence between EU Regions: An Examination Based on a Conditional Beta-Convergence Model with a 3-Way Multiplicative Term

“…Insecurity may prevent trade even though it offers potential mutual gains [21,46] Inward FDI flows attract advanced foreign technology and innovative managerial skills. This, in turn, leads to a better distribution of CP support [47] Better IQ causes higher inward FDI flows forming a favourable environment and a flexible local government decision-making system [21,23,48,49] Territorial capital/ conditions…”