Saka, Orkun, Campos, Nauro F., De Grauwe, Paul, Ji, Yuemei and Martelli, Angelo 
ORCID: 0009-0004-1637-1620
(2020)
Financial crises and liberalization: progress or reversals?
In: Campos, Nauro F., De Grauwe, Paul and Ji, Yuemei, (eds.)
Economic Growth and Structural Reforms in Europe.
Cambridge University Press, Cambridge, UK, 177 - 213.
ISBN 9781108479110
Abstract
Financial crisis could play a key role in changing the policy equilibrium concerning financial markets and institutions. Using a recent comprehensive dataset on financial liberalization across ninety-four countries for the period between 1973 and 2015, we formally test the validity of this prediction for the member states of the European Union as well as a global sample. We contribute by (a) using a new up-to-date dataset of reforms and crises and (b) subjecting it to a combination of difference-in-differences and local projection estimations. In the global sample, our findings on the causal relationship between crises and liberal reforms consistently point out a negative direction between the two, suggesting that governments react to crises by intervening in financial markets. However, in a dynamic setting with impulse responses, we also illustrate that such interventions are only temporary and liberalization process restarts after a financial crisis. In the EU sample, however, we do not find sufficient evidence to support either of these observations.
| Item Type: | Book Section |
|---|---|
| Official URL: | https://www.cambridge.org/gb/academic/subjects/eco... |
| Additional Information: | © 2020 Cambridge University Press |
| Divisions: | European Institute |
| Subjects: | H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance J Political Science > JN Political institutions (Europe) |
| JEL classification: | G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation P - Economic Systems > P1 - Capitalist Systems > P11 - Planning, Coordination, and Reform P - Economic Systems > P1 - Capitalist Systems > P16 - Political Economy |
| Date Deposited: | 26 May 2022 10:45 |
| Last Modified: | 09 Nov 2024 03:12 |
| URI: | http://eprints.lse.ac.uk/id/eprint/115211 |
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