Financial structure, capital openness and financial crisis

Weiyang Zhai

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines how the financial structure and capital openness of a country have affected the likelihood of financial crisis over the past two decades. By applying a panel probit estimation to a sample of 38 countries, we find the following. 1) An economy with a more market-based financial structure is less likely to experience a currency crisis. 2) More capital openness is associated with a lower probability of a currency crisis. 3) Countries with a more market-based financial structure are also less likely to experience a currency crisis if that structure is coupled with a more open capital account. 4) Unlike what is found for currency crises, neither financial structure nor capital openness has any effect on banking crises.

Keywords: financial structure; capital openness; currency crisis; banking crisis (search for similar items in EconPapers)
JEL-codes: G01 G15 G28 (search for similar items in EconPapers)
Date: 2020-12-29
New Economics Papers: this item is included in nep-cba, nep-cfn, nep-cwa, nep-fdg and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:105457

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