Emerging Markets, Financial Openness and Financial Development

Wei Huang ()

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: We examine the effect of financial openness on the development of financial systems in a panel of 35 emerging markets during the period of 1976 to 2003. A group of indicators including variables from banking sector, stock market, and national capital accounts are used as measures of financial openness and financial development. In addition, aggregate index measures are developed to incorporate information from different areas of the financial system. Our empirical results generally suggest that financial openness is the key determinant of cross-country differences in the development of financial systems. When testing financial openness against the development of the banking sector and stock market separately, we found strong and robust evidence that this link between openness and development exists in stock markets. Although a similar link is sometimes found with banking sectors, it is not robust to different indicators of financial openness and model specifications.

Keywords: emerging markets; financial openness; financial development (search for similar items in EconPapers)
JEL-codes: F36 F37 G15 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2006-07
New Economics Papers: this item is included in nep-dev, nep-fdg, nep-fin and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:06/588

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