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Journal of Banking & Finance Vol. 30 No. 12 2006

Decomposing the effects of financial liberalization: Crises vs. growth

Romain Rancière; Aarón Tornell1,2; Frank Westermann3

1 University of California, Los Angeles · 2 National Bureau of Economic Research · 3 Osnabrück University

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.

DOI
10.1016/j.jbankfin.2006.05.019
Volume
30
Issue
12
Pages
3331-3348
Language
en
Sources
crossref openalex bibtex:phds-export.bib

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