Growth volatility and financial liberalization

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

doi:10.1016/j.jimonfin.2006.01.003

Cited by 349 publications

(216 citation statements)

References 72 publications

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“…In other words, extracting the capital control will permit both domestic and foreign investors to have a more diversified portfolio and improve risk sharing which may lower economic volatility. This is in line with Chinn and Ito (2006) who study a group of 108 countries, including 21 industrialized countries and 31 emerging market countries, and Bekaert et al (2006) with a group of 95 countries in which 50 countries that were mainly industrialized and some emerging economies with an active stock market, and 30 countries with emerging equity markets in a cross-country analysis. also added that for industrial sectors that strongly depend on external financing may constitute a comparative advantage for them which may ease volatility arise from consumption shocks for 36 industries and 56 countries from 1980 to 1989 provided by cross-country analysis.…”

Section: Selected Literaturesupporting

confidence: 81%

“…This shows that financial openness may act as a medium of international risk sharing rather than the medium of contagion and increase investment portfolio diversification, while trade openness may further improve resource allocation, lower consumers' prices and lead to more efficient production, thus reducing volatility. This findings is parallel with such as Razin and Rose (1992), , Chinn and Ito (2006), Bekaert et al (2006) and Samsudin (2013) who also found the existence of smoothing effects flowing from financial and trade openness towards economic volatility in the long-run.…”

Section: The Findingssupporting

confidence: 78%

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Can Greater Openness and Deeper Financial Development Drag ASEAN-5 into Another Series of Economic Crises?

Samsudin¹

2016

ASS

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In the event of economic crises, it is observed that economic volatility becomes more severe. Therefore, the aim of this study is to examine the impact of greater openness and deeper financial sector development in influencing the level of economic volatility which could trigger economic crises in both long-and short-run periods in the case of ASEAN-5 countries, namely Indonesia, Malaysia, Philippines, Singapore and Thailand. Given that more attention is needed to address the issue, the Pooled Mean Group (PMG) estimations developed by Pesaran et al. (1999) and data ranging from 1980 to 2014 were employed to address the issue. With the ability to estimate short-run coefficients at each country level and its speed of adjustment, this study further fills the knowledge gap. Based on the analysis, it is found that greater trade and financial openness may further relax economic volatility in the long-run, suggesting greater international risk sharing which soothes consumption shocks. In terms of the effect of financial development towards economic volatility, it is found that only deeper banking sector development may reduce economic volatility in the long-run, but the same may not apply in the case of greater stock market development. Particularly, it is suggested that it is in the nature of developments in the banking sector to likely provide longer financing options and greater banker capabilities in detecting riskier investments, thus giving a favourable impact on economic volatility. It is a contrast with the stock market sector where it is more likely to be more susceptible towards large and sudden capital outflows. Its tendency to provide capital towards riskier investments may worsen volatility in the longer term. Nevertheless, in the short-run, the effects of greater openness and financial development is not as obvious as in the long-run; financial openness and greater stock market sector development may significantly relax economic volatility. As suggested by the speed of adjustment, the equilibrium from short-run to long-run is corrected by 1.71% and 2.33% in a year. Cumulatively, it can be said that there is no evidence that greater openness and deeper financial development may drag ASEAN-5 into another series of crises except in the case of stock market sector development. Therefore, the source of instability in the region is likely to be driven from greater stock market sector development rather than greater openness and banking sector development.

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Section: Selected Literaturesupporting

confidence: 81%

Section: The Findingssupporting

confidence: 78%

Can Greater Openness and Deeper Financial Development Drag ASEAN-5 into Another Series of Economic Crises?

Samsudin¹

2016

ASS

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“…While these findings indicate that consumption volatility and financial openness might be correlated, Bekaert et al (2004) directly analyze the link between consumption volatility and financial liberalization. Their results show that financial liberalization tends to be associated with lower consumption volatility.…”

Section: Motivationmentioning

confidence: 93%

Consumption volatility and financial openness

Buch

Yener²

2010

Applied Economics

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Economic theory predicts that the integration of financial markets lowers the volatility of consumption. In this article, we study long-term trends in the consumption volatility of the G7 countries. Using different measures of financial openness, we find evidence that greater financial openness has been associated with lower consumption volatility. However, volatility of consumption relative to output has not declined.

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“…Alövsat (1998) stated that there is a strong correlation between the capital market development and real economic indicators in developing countries. The study of Bekaert and Harvey (2001) showed that 30 percent of economic growth will be explained by financial liberalization. Caporale, Howells & Soliman (2004) used seven countries 1977-1998 period data and revealed the significant impact of capital markets on economic development.…”

Section: International Journal Of Economic and Administrative Studiesmentioning

confidence: 99%

World in 2023: Estimation by Population, Capital Markets and Economic Size

Kaya¹,

Bozkurt²,

Karakuş³

et al. 2015

UİİİD

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This study focuses on two aims. First aim of the study is to determine the relationship between change in population, poor population and capital markets development with change in GDP. The second aim is to forecast the position of countries in 2023 by using determined relations. To determine the relationships, data of 135 countries between 1980 and 2010 were analyzed. Analysis results revealed that population changes and capital market development have a statistically significant effect on GDP. In addition, there is a statistically significant relationship between population growth and poverty. In addition, it is stated that development of E7 countries will become higher than the development of G7 countries.Keywords: GDP, Poverty, Population, Capital Markets. JEL Classification: I32, D53, E01, P50 2023'DE DÜNYA: NÜFUS, SERMAYE PİYASALARI ve EKONOMİK BÜYÜKLÜK İLE TAHMİN EDİLMESİ ÖZBu çalıĢma iki amaca odaklanmaktadır.ÇalıĢmanın ilk amacı; nüfusta, yoksul nüfusta ve sermaye piyasalarının geliĢiminde meydana gelen değiĢim ile GSYĠH'de meydana gelen değiĢim arasındaki iliĢkiyi belirlemektir. ÇalıĢmanın ikinci amacı ise belirlenen iliĢkileri kullanarak ülkelerin 2023 yılındaki durumunu tahmin etmektir. Ġlgili değiĢkenler arasındaki iliĢkileri belirlemek için 135 ülkenin 1980 ile 2010 yılları arasındaki verileri analiz edilmiĢtir. Analiz sonuçları, nüfustaki değiĢim ile sermaye piyasasındaki geliĢimin GSYĠH üzerinde istatistiki olarak anlamlı bir etkiye sahip olduğunu ortaya koymuĢtur. Ayrıca, nüfustaki artıĢ ile yoksulluk arasında da istatistiki olarak anlamlı bir iliĢki bulunmuĢtur. Bunun yanında; E7 ülkelerinde beklenen geliĢimin, G7 ülkelerindeki beklenen geliĢimden daha fazla olduğu ortaya konulmuĢtur.

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Growth volatility and financial liberalization

Cited by 349 publications

References 72 publications

Can Greater Openness and Deeper Financial Development Drag ASEAN-5 into Another Series of Economic Crises?

Can Greater Openness and Deeper Financial Development Drag ASEAN-5 into Another Series of Economic Crises?

Consumption volatility and financial openness

World in 2023: Estimation by Population, Capital Markets and Economic Size

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