Abstract
Financial liberalization has led to financial deepening and higher growth in several countries. However, it has also led to a greater incidence of financial crises. Here, we review the empirical evidence on these dual effects of financial liberalization across different groups of countries. We then present a conceptual framework that explains why there is a trade-off between growth and incidence of crisis, and helps account for the cross-country difference in the effects of financial liberalization.
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Rancière, R., Tornell, A., Westermann, F. (2018). Financial Liberalization. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2827
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2827
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Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
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