Does Financial Liberalization Accentuate Financial Instability?

OnderzoeksoutputAcademicpeer review


The impact of financial liberalization on financial instability is theoretically ambiguous. By including financial liberalization policies in a standard model of the loan market with asymmetric information, this article identifies the entry of risky entrepreneurs and decreased borrowing costs as two channels by which financial instability exerts an impact. A new data set, covering 85 countries during 2000–2009, provides proxies for the financial instability of impaired bank loans. Using an existing measure of financial liberalization, this investigation finds that more liberalized countries experienced a steeper increase in impaired loans after the 2008 global financial crisis. These findings have several research and policy implications
Originele taal-2English
TitelInclusive Financial Development
RedacteurenAhmad H. Ahmad, David Llewellyn, Victor Murinde
Plaats van productieCheltenham
UitgeverijEdward Elgar Publishing
Aantal pagina's31
ISBN van elektronische versie9781800376380
ISBN van geprinte versie9781800376373
StatusPublished - 19-okt.-2021

Publicatie series

NaamNew Horizons in Money and Finance
UitgeverijEdward Elgar Publishing

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