scholarly journals Financial Sector Liberalization and Financial Instability: Case of Selected Southern African Development Community Member Countries

2018 ◽  
Vol 10 (6) ◽  
pp. 42
Author(s):  
Nolungelo Cele ◽  
Kapingura FM
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Financial Liberalization ◽  
Financial Sector ◽  
Financial Instability ◽  
Domestic Economy ◽  
Financial Reforms ◽  
Empirical Results ◽  
The Face ◽  
Almost All

The importance of financial liberalization is well documented in the literature. However, there has been an emergency of studies, which indicate that this can be another channel through which financial instability is generated in the domestic economy. Utilising data from four SADC countries, the empirical findings show that financial reforms are positively related to financial instability in almost all the specifications. The empirical results further revealed that financial instability intensifies in the face of a financial crisis. The result suggests that financial liberalization can therefore be another source of financial instability in the region. The empirical results imply that though policymakers should liberalise the financial system, policies aimed at maintaining financial stability should also be promoted.

scholarly journals Financial Sector Liberalization and Financial Instability: Case of Selected Southern African Development Community Member Countries

2018 ◽  
Vol 10 (6(J)) ◽  
pp. 42-49
Author(s):  
Nolungelo Cele ◽  
Kapingura FM
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Financial Liberalization ◽  
Financial Sector ◽  
Financial Instability ◽  
Domestic Economy ◽  
Financial Reforms ◽  
Empirical Results ◽  
The Face ◽  
Almost All

The importance of financial liberalization is well documented in the literature. However, there has been an emergency of studies, which indicate that this can be another channel through which financial instability is generated in the domestic economy. Utilising data from four SADC countries, the empirical findings show that financial reforms are positively related to financial instability in almost all the specifications. The empirical results further revealed that financial instability intensifies in the face of a financial crisis. The result suggests that financial liberalization can therefore be another source of financial instability in the region. The empirical results imply that though policymakers should liberalise the financial system, policies aimed at maintaining financial stability should also be promoted.

Lessons from the Crisis

2010 ◽  
Author(s):  
Jean Tirole
Keyword(s):  
Public Policy ◽  
Financial Crisis ◽  
Real Estate ◽  
Consumer Protection ◽  
Financial Regulation ◽  
Financial Sector ◽  
System Reform ◽  
Financial Reforms ◽  
Mortgage Crisis ◽  
Regulatory Failure

This chapter aims to contribute to the debate on financial system reform. The first part describes what is perceived to be a massive regulatory failure, a breakdown that goes all the way from regulatory fundamentals to prudential implementation. The second part discusses some implications of recent events for financial sector regulation. It argues that to avoid a repetition of the financial crisis, we need both to change public policies that contributed to the crisis (particularly the mortgage crisis) and to institute financial reforms. Desirable reforms of public policy regarding real estate lending include promoting consumer protection and reducing subsidies. Financial regulation must also be international. The creation of supranational regulatory structures has become increasingly urgent in a world in which institutions and counterparties are truly international.

scholarly journals Determinants of Financial Liberalization in SAARC Region

2021 ◽  
Vol 29 (1) ◽  
Author(s):  
Syed Danial Hashmi ◽  
Iram Naz ◽  
Farrukh Mehmood ◽  
Mattiullah Farooqi
Keyword(s):  
South Asian ◽  
Financial Liberalization ◽  
Regional Cooperation ◽  
Trade Openness ◽  
Political Stability ◽  
Economic Factors ◽  
Financial Reforms ◽  
Panel Data Estimation ◽  
The Face ◽  
Static Modeling

Financial liberalization is the face of financial reforms around the world. This study examines the determinants of financial liberalization in SAARC (South Asian Association for Regional Cooperation) countries. The study considers both political and economic factors as possible determinants of financial liberalization. Data from five countries of the South Asian region (Bangladesh, India, Nepal, Pakistan, and Sri Lanka) over a time span of 48 years i.e. 1970 to 2018 had been analyzed. We selected 1970 as a start point of data as liberalization policies were theoretically advocated for and practically started implementing in the ’70s. The result of panel data estimation shows that among economic factors trade openness, foreign reserves, economic development (GDP growth), and recession predict financial liberalization in the SAARC region. Further, political stability and level of democracy are important political factors in predicting financial liberalization in the region. The country-specific analysis shows some variation from the overall region and is reported in the results section. We also tested for the likelihood of dynamic modeling. However, the result of Arellano and Bond estimation shows that static modeling is appropriate in our context and validates the robustness of our initial estimates. Our study gives useful insights to the policymakers who aim to liberalize the financial markets.

scholarly journals THE NUMBER OF FINANCIAL REGULATORY AUTHORITIES AND FINANCIAL STABILITY: CROSS-COUNTRY EXPERIENCES

2014 ◽  
Vol 17 (1) ◽  
pp. 129-145
Author(s):  
Wahyoe Soedarmono ◽  
Romora Edward Sitorus
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Financial Sector ◽  
Developed Countries ◽  
Jel Classification ◽  
Less Developed Countries ◽  
Empirical Results ◽  
Different Types ◽  
Cross Country ◽  
Financial Regulatory

This paper attempts to provide evidence whether or not the unification of regulatory institutions for different types of financial sector creates challenges for financial stability. From a sample of 91 countries that provide data on the financial unification index and the central bank involvement index, the empirical results reveal that higher financial unification index or the convergence toward a single supervisory institution outside the central bank, in order to control three different sectors (banking, insurance, and securities), is detrimental for financial stability. However, this finding only holds for developed countries, but dissapears for less developed countries. In parallel, the central bank involvement in financial sector supervision has no impact on financial stability in both developed and less developed countries.  Keywords: Supervisory Regimes, Financial Sectors, Financial Stability  JEL Classification: G18, G21, G28

scholarly journals Financial Frictions in Macroeconomic Models

2018 ◽  
Author(s):  
Alfred Duncan ◽  
Charles Nolan
Keyword(s):  
Financial Stability ◽  
Financial Frictions ◽  
Financial Sector ◽  
Financial Intermediaries ◽  
Financial Instability ◽  
External Shocks ◽  
Macroeconomic Dynamics ◽  
Macroeconomic Models ◽  
Macroprudential Policies

In recent decades, macroeconomic researchers have looked to incorporate financial intermediaries explicitly into business-cycle models. These modeling developments have helped us to understand the role of the financial sector in the transmission of policy and external shocks into macroeconomic dynamics. They also have helped us to understand better the consequences of financial instability for the macroeconomy. Large gaps remain in our knowledge of the interactions between the financial sector and macroeconomic outcomes. Specifically, the effects of financial stability and macroprudential policies are not well understood.

scholarly journals The Financial (In)Stability Real Interest Rate, R**

2021 ◽  
Vol 2021 (1308) ◽  
pp. 1-23
Author(s):  
Ozge Akinci ◽  
◽  
Gianluca Benigno ◽  
Marco Del Negro ◽  
Albert Queralto ◽  
...  
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Financial Stability ◽  
Real Interest Rate ◽  
Financial Sector ◽  
Condition Index ◽  
Lower Threshold ◽  
Financial Instability ◽  
Financial Condition ◽  
Financing Constraint

We introduce the concept of financial stability real interest rate using a macroeconomic banking model with an occasionally binding financing constraint as in Gertler and Kiyotaki (2010). The financial stability interest rate, r**, is the threshold interest rate that triggers the constraint being binding. Increasing imbalances in the financial sector measured by an increase in leverage are accom- panied by a lower threshold that could trigger financial instability events. We also construct a theoretical implied financial condition index and show how it is related to the gap between the natural and financial stability interest rates.

scholarly journals Financial Stability: Risks, Resilience, and Policy

2020 ◽  
pp. 1-4
Author(s):  
Joseph G. Haubrich
Keyword(s):  
Financial Crisis ◽  
Financial Markets ◽  
Financial Stability ◽  
Financial System ◽  
Financial Sector ◽  
Markets And Institutions ◽  
Recent Conference ◽  
The Stability

As the COVID-19 pandemic and its economic fallout continue, policymakers keep a watchful eye on the stability of the financial system. Having learned many lessons from the financial crisis of 2007–2009, they may again turn to that crisis for insights into potential vulnerabilities emerging in the financial sector and ways to make financial markets and institutions more resilient to shocks. At a recent conference on financial stability, 12 papers and two keynotes explored this ground. This Commentary summarizes the papers’ findings and the keynotes.

The Diplomacy of the Financial Crisis in Context

2011 ◽  
Vol 6 (1-2) ◽  
pp. 187-201 ◽  
Author(s):  
Nicholas Bayne
Keyword(s):  
Decision Making ◽  
Financial Crisis ◽  
Private Sector ◽  
Emerging Markets ◽  
Financial Crises ◽  
Financial Stability ◽  
Regulatory Capture ◽  
Financial Reforms ◽  
Economic Diplomacy ◽  
Main Culprit

AbstractUntil the 1980s, financial crises were caused by governments. But thereafter the private sector became the main culprit. The reforms introduced after the Asian crisis of the late 1990s were not properly implemented. Responsibility for financial stability became fragmented and the normal practices of economic diplomacy were abandoned. The crisis of 2007 thus caught governments unawares and obliged them to adopt extreme measures to avoid catastrophe. The decision-making that was associated with these measures gave more power to emerging markets through the G20. It ended the fragmentation of authority and achieved reasonable consistency of national, European and international financial reforms. It introduced stringent new rules in place of regulatory capture. But this progress was fragile: G7 members still tried to control the G20; the new reforms depended on national enforcement; and governments still needed too much from the banks to be able to discipline them completely. This crisis might be over, but it has left the seeds of the next one.

scholarly journals Financial Regulation in Achieving Financial Stability: Selected EU Countries and Turkey Comparison

2014 ◽  
Author(s):  
İsmail Ciğerci ◽  
Cem Gökce
Keyword(s):  
Financial Crisis ◽  
Financial Markets ◽  
Financial Stability ◽  
Financial Regulation ◽  
Financial Instability ◽  
Payment Systems ◽  
Eu Countries ◽  
Financial Regulations ◽  
Economic Decisions ◽  
The Stability

Financial stability means the stability in payment systems and also means resistance against shocks in financial markets and in foundations being active in such markets. Stability in financial markets usually brings along the financial system’s stable action, accordingly the allocation of sources in economy in a productive way and the management and distribution of risks in a suitable way. It is, however, a certain fact that financial instability causes important problems in economy. Such instabilities cause financial crisis and so, high costs of the financial crisis emphasizes the importance of financial stability. One of the most common methods used to prevent financial instability is the ‘’financial regulation’’. Financial regulations are the rules and limitations laid down by the public to the financial spies’ economic decisions and actions in order to increase its own social purpose function. Financial regulatory services are composed of three parts: to observe the actions of financial foundations, to discipline them, and to coordinating them. Since financial markets are of more importance in economy comparing to other markets, financial regulation is different from the other regulations as well. The purpose of the financial regulation implemented for the financial markets is to equalize the distribution of the data owned by individuals who are transacting in the financial system. In this research, the importance of financial regulations in achieving financial stability is being emphasized and selected-EU countries and Turkey will be compared.

scholarly journals Impact Of Financial Reforms On The Banking System In Ghana

2011 ◽  
Vol 8 (3) ◽  
Author(s):  
George Owusu-Antwi
Keyword(s):  
Economic Development ◽  
Interest Rate ◽  
Financial Liberalization ◽  
Banking System ◽  
Financial System ◽  
Financial Sector ◽  
Partial Privatization ◽  
Financial Reforms ◽  
Public Sector Banks ◽  
Adjustment Program

The pre-reform policies, coupled with an acute and prolonged economic crisis which severely damaged the financial system in Ghana, caused policymakers to address the institutional deficiencies of the financial system through the Financial Sector Adjustment Program. This paper investigated the pre- and post-reforms policies to determine whether those policies have helped to eradicate problems that have hindered the effectiveness of the financial system. The liberalization of Ghanas financial system has included the relaxation of interest rate controls, credit ceiling, partial privatization of the governments own banks, restructuring of public sector banks, capital markets developments, and deregulation of the prudential system. The performance of the financial sector has been substantial and healthy since the reforms. Overall, the financial liberalization strategy pursued in Ghana has been supportive of wider economic development.

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