Decomposing the Effects of Finncial Liberalization: Growth vs. Crises

Romain Ranciere, Aaron Tornell and Frank Westermann
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Aaron Tornell: NBER - The National Bureau of Economic Research, LBNL - Lawrence Berkeley National Laboratory [Berkeley]

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Abstract: We present a new empirical decomposition of the effects of financial liberalization on economic growth and on the incidence of crises. Our empirical estimates show that the direct effect of financial liberalization on growth by far outweighs the indirect effect via a higher propensity to crisis. We also discuss several models of financial liberalization and growth whose predictions are consistent with our empirical findings.

Keywords: Financial crises; Growth; Financial liberalization; Treatment effects models (search for similar items in EconPapers)
Date: 2006-12
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Citations: View citations in EconPapers (74)

Published in Journal of Banking and Finance, 2006, 30 (12), pp.3331-3348. ⟨10.1016/j.jbankfin.2006.05.019⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754116

DOI: 10.1016/j.jbankfin.2006.05.019

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