Capital Account Liberalization, Financial Depth and Economic Growth

Michael Klein and Giovanni Olivei

No 7384, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show a statistically significant and economically relevant effect of open capital accounts on financial deepness and economic growth in a cross-section of countries over the period 1986 to 1995. Countries with open capital accounts over some or all of this period had a significantly greater increase in financial depth than countries with continuing capital account restrictions, and they also enjoyed greater economic growth. There results, however, are largely driven by the developed countries in the sample. The observed failure of capital account liberalization to promote financial deepness among developing countries suggests potentially important policy implications concerning the desirability of liberalizing the capital account.

JEL-codes: F36 F43 (search for similar items in EconPapers)
Date: 1999-10
New Economics Papers: this item is included in nep-ifn
Note: IFM
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Citations: View citations in EconPapers (182)

Published as Klein, Michael W. and Giovanni P. Olivei. "Capital Account Liberalization, Financial Depth, and Economic Growth." Journal of International Money and Finance 27, 6 (October 2008): 861-75.

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Working Paper: Capital account liberalization, financial depth, and economic growth (1999)
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