How Does Financial Liberalization affect Economic Growth?

Alessandra Bonfiglioli ()

No 736, Seminar Papers from Stockholm University, Institute for International Economic Studies

Abstract: This paper assesses the effects of international financial liberalization and banking crises on investments and productivity in a sample of 93 countries (at its largest) observed between 1975 and 1999. I provide empirical evidence that financial liberalization spurs productivity growth and marginally affects capital accumulation. Banking crises depress both investments and TFP. Both levels and growth rates of productivity respond to financial liberalization and banking crises. The paper also presents evidence of conditional convergence in productivity across countries. However, the speed of convergence is unaffected by financial liberalization. These results are robust to a number of econometric specifications.

Keywords: Capital account liberalization; equity market liberalization; financial development; banking crises; growth; productivity; investments; convergence (search for similar items in EconPapers)
JEL-codes: C23 F43 G15 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev
Date: 2005-05-10
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:iiessp:0736

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