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Financial Liberalization and Institutional Development
This paper empirically analyzes the effects of de jure financial openness on institutional quality as captured by indicators on investment risk, corruption level, impartiality of judiciary system as well as the effectiveness of bureaucratic authorities. Using a panel data set of more than 110 co...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 19-2012) |
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| Main Authors: | , |
| Format: | Work |
| Language: | English |
| Published: |
Philipps-Universität Marburg
2012
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | This paper empirically analyzes the effects of de jure financial openness
on institutional quality as captured by indicators on investment
risk, corruption level, impartiality of judiciary system as well as the effectiveness
of bureaucratic authorities. Using a panel data set of more
than 110 countries and a time span from 1984 to 2005, we show that
a higher degree of financial openness improves institutional quality in
particular by reducing investment risks. We also study the effect of a
single liberalization reform on the development of institutional quality.
Again, we find evidence for the beneficial impact of financial liberalization
with the exception of the level of corruption. We additionally
show that if financial liberalization is supported by simultaneous political
liberalization, the benign consequences of financial opening for the
institutional performance are even larger, while financial deregulation
in former socialist countries tends to worsen institutional quality. |
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| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0133 |