Do institutional quality and trade openness enhance the role of financial openness in Eastern European financial development?

Hyun-Jung Nam, Jonathan A. Batten and Doojin Ryu

Global Finance Journal, 2025, vol. 64, issue C

Abstract: This study examines the impact of financial openness on financial development and the moderating roles of institutional quality and trade openness in Eastern European countries over several decades. We focus on the period following the Berlin Wall (post-1989) and the transition from centrally planned to market-oriented economies after 1991. Financial openness promotes financial development, with institutional quality strengthening this effect, whereas trade openness weakens the positive impact of financial openness. Our results suggest that excessive openness may hinder financial development in Eastern Europe, highlighting the need for a balanced approach to financial globalization, particularly in transitioning economies.

Keywords: Eastern Europe; Financial development; Financial openness; Institutional quality; Trade openness (search for similar items in EconPapers)
JEL-codes: B17 F13 F41 G15 G18 G21 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:64:y:2025:i:c:s1044028324001431

DOI: 10.1016/j.gfj.2024.101071

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