Economics at your fingertips  

Openness and financial stability

Christopher Baum (), Madhavi Pundit () and Arief Ramayandi ()

No 8652, EcoMod2015 from EcoMod

Abstract: This paper investigates the relationship between a country's financial openness and its domestic financial stability. We evaluate the relationship between gross capital flows and various measures of financial stability for 16 emerging and newly industrialized economies by considering not only the levels of gross capital flows, but also their volatilities, as the latter may have particular relevance for stability of the financial sector.For each measure of financial stability, we employ systems of seemingly unrelated regression (SUR) estimators to allow for complete flexibility of the estimated relationships while allowing for cross-equation restrictions to be tested and, if warranted, imposed on the equation system. The findings suggest that there are significant effects of gross capital flows' levels and volatilities on both the level and volatility of the financial stability proxies after controlling for a number of macroeconomic factors, with a clear impact of the gross capital flows' volatility on the level of financial stability.

Keywords: 16 developing and newly industrialized countries; Developing countries; Business cycles (search for similar items in EconPapers)
Date: 2015-07-01
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in EcoMod2015 from EcoMod Contact information at EDIRC.
Bibliographic data for series maintained by Theresa Leary ().

Page updated 2018-12-14
Handle: RePEc:ekd:008007:8652