Financial liberalization and financial fragility

Asli Demirguc-Kent and Enrica Detragiache ()
Authors registered in the RePEc Author Service: Asli Demirguc-Kunt

No 1917, Policy Research Working Paper Series from The World Bank

Abstract: The authors study the empirical relationship between banking crises and financial liberalization using a panel of data for 53 countries for 1980-95. They find that banking crises are more likely to occur in liberalized financial systems. But financial liberalization's impact on a fragile banking sector is weaker where the institutional environment is strong--especially where there is respect for the rule of law, a low level of corruption, and good contract enforcement. They examine evidence on the behavior of bank franchise values after liberalization. They also examine evidence on the relationship between financial liberalization, banking crises, financial development, and growth. the results support the view that, even in the presence of macroeconomic stabilization, financial liberalization should be approached cautiously in countries where institutions to ensure legal behavior, contract enforcement, and effective prudential regulation and supervision are not fully developed.

Keywords: Banks&Banking Reform; Financial Crisis Management&Restructuring; Insurance&Risk Mitigation; Payment Systems&Infrastructure; Insurance Law; Financial Economics; Financial Intermediation; Banks&Banking Reform; Financial Crisis Management&Restructuring; Insurance&Risk Mitigation (search for similar items in EconPapers)
Date: 1998-05-31
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (292)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... d/PDF/multi_page.pdf (application/pdf)

Related works:
Working Paper: Financial Liberalization and Financial Fragility (1998)
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: https://EconPapers.repec.org/RePEc:wbk:wbrwps:1917

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().