Financial Liberalization and Banking Crises: The Role of Capital Inflows and Lack of Transparency

2005 ◽  
Author(s):  
Mariassunta Giannetti
Keyword(s):  
Financial Liberalization ◽  
Banking Crises ◽  
Capital Inflows

scholarly journals The Twin Crises: The Causes of Banking and Balance-of-Payments Problems

1999 ◽  
Vol 89 (3) ◽  
pp. 473-500 ◽  
Author(s):  
Graciela L Kaminsky ◽  
Carmen M Reinhart
Keyword(s):  
Economic Activity ◽  
Financial Crises ◽  
Currency Crises ◽  
Banking Sector ◽  
Financial Liberalization ◽  
Currency Crisis ◽  
Banking Crises ◽  
Balance Of Payments ◽  
Capital Inflows ◽  
The Subject

In the wake of the Mexican and Asian currency turmoil, the subject of financial crises has come to the forefront of academic and policy discussions. This paper analyzes the links between banking and currency crises. We find that: problems in the banking sector typically precede a currency crisis—the currency crisis deepens the banking crisis, activating a vicious spiral; financial liberalization often precedes banking crises. The anatomy of these episodes suggests that crises occur as the economy enters a recession, following a prolonged boom in economic activity that was fueled by credit, capital inflows, and accompanied by an overvalued currency. (JEL F30, F41)

scholarly journals Bond markets and banking crises in emerging market economies: The role of institutions

2012 ◽  
Vol 59 (5) ◽  
pp. 625-646 ◽  
Author(s):  
Jamel Boukhatem
Keyword(s):  
Financial Liberalization ◽  
Emerging Market ◽  
Banking Crises ◽  
Emerging Countries ◽  
Combined Effect ◽  
Bond Markets ◽  
Financial Systems ◽  
Empirical Tests ◽  
The Relationship

This paper deals with the question of knowing if countries whose activity of financing is mainly bank based face crises more expensive than those where the bond markets are broader and more developed. The results of the empirical tests on a panel of emerging countries suggest that bank based financial systems are associated with crises slightly more expensive, whereas the relationship between the bond markets and the crises? costs is fragile. Moreover, financial systems where bond markets play an important role are associated with a higher growth of the production, and this, independently of the presence or not of crises. The consideration of the combined effect of financial liberalization and institutional framework on the bond markets development shows the importance of the direction of the financial liberalization. We join in this case one of the most significant aspects of the ?sequencing? theorized by McKinnon (1973). Finally, an effective prudential regulation tends to reduce significantly the probability of occurrence of banking crises.

Big Business and the State in the Neoliberal Era

2017 ◽  
Author(s):  
Daniel Maman
Keyword(s):  
Financial Liberalization ◽  
Business Groups ◽  
State Agencies ◽  
Private Capital ◽  
Dominant Position ◽  
Big Business ◽  
The Public ◽  
Neoliberal Policies ◽  
State Subsidies

The chapter documents patterns of both change and continuity in the structure of big business in Israel in the neoliberal era, and the role of state agencies vis-à-vis big business. Specifically, it discusses how privatization, financial liberalization, and direct and indirect state subsidies have contributed to the dominant position of large enterprises and business groups in the Israeli political economy. While neoliberal policies have served the interests of private capital and business groups, they were actively driven by state agencies seeking to regain autonomy by withdrawing unselective and burdensome state subsidies, and by shrinking and depoliticizing the public sector.

Capital Inflows and Economic Growth in Nigeria: The Role of Macroeconomic Policies

2016 ◽  
Vol 28 (3) ◽  
pp. 277-290 ◽  
Author(s):  
Philip Ifeakachukwu Nwosa ◽  
Temidayo Oladiran Akinbobola
Keyword(s):  
Economic Growth ◽  
Capital Inflows ◽  
Macroeconomic Policies

The persistent effect of banking crises on investment and the role of financial markets

2014 ◽  
Vol 6 (1) ◽  
pp. 64-77 ◽  
Author(s):  
Felix Rioja ◽  
Fernando Rios-Avila ◽  
Neven Valev
Keyword(s):  
Financial Markets ◽  
Financial Development ◽  
Banking Crisis ◽  
Banking Crises ◽  
Output Growth ◽  
Long Term Effects ◽  
Content Type ◽  
Negative Effect

Purpose – While the literature studying the effect of banking crises on real output growth rates has found short-lived effects, recent work has focused on the level effects showing that banking crises can reduce output below its trend for several years. This paper aims to investigate the effect of banking crises on investment finding a prolonged negative effect. Design/methodology/approach – The authors test to see whether investment declines after a banking crisis and, if it does, for how long and by how much. The paper uses data for 148 countries from 1963 to 2007. Econometrically, the authors test how banking crises episodes affect investment in future years after controlling for other potential determinants. Findings – The authors find that the investment to GDP ratio is on average about 1.7 percent lower for about eight years following a banking crisis. These results are robust after controlling for credit availability, institutional characteristics, and a host of other factors. Furthermore, the authors find that the size and duration of this adverse effect on investment varies according to the level of financial development of a country. The largest and longer-lasting decrease in investment is found in countries in a middle region of financial development, where finance plays its most important role according to theory. Originality/value – The authors contribute by finding that banking crisis can have long-term effects on investment of up to nine years. Further, the authors contribute by finding that the level of development of the country's financial markets affects the duration of this decrease in investment.

scholarly journals The Role of Macroeconomic Shocks in Banking Crises

2002 ◽  
Author(s):  
Jarmo Pesola
Keyword(s):  
Banking Crises ◽  
Macroeconomic Shocks

Korea's Post-Crisis Monetary Policy Reforms

2005 ◽  
Vol 08 (04) ◽  
pp. 707-731 ◽  
Author(s):  
Donghyun Park ◽  
Junggun Oh
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Inflation Targeting ◽  
Financial System ◽  
Capital Inflows ◽  
Policy Reforms ◽  
The Future

Korea's financial crisis of 1997–1998 was brought about by the unsustainable combination of large capital inflows and an inefficient financial system. The Bank of Korea contributed to the crisis primarily through its failures as the regulator of the financial system rather than as the conductor of monetary policy. Our paper explores the role of the two major monetary policy reforms Korea has implemented in response to the crisis — the establishment of a new financial regulator and the adoption of inflation targeting — in Korea's efforts to build a stronger and more efficient financial system, thereby preventing crises in the future.

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