NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Decomposing the Effects of Financial Liberalization: Crises vs. Growth

Romain Ranciere, Aaron Tornell, Frank Westermann

NBER Working Paper No. 12806
Issued in December 2006
NBER Program(s):   IFM   EFG

We present a new empirical decomposition of the effects of financial liberalization on economic growth and on the incidence of crises. Our empirical estimates show that the direct effect of financial liberalization on growth by far outweighs the indirect effect via a higher propensity to crisis. We also discuss several models of financial liberalization and growth whose predictions are consistent with our empirical findings.

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Document Object Identifier (DOI): 10.3386/w12806

Published: Ranciere, Romain & Tornell, Aaron & Westermann, Frank, 2006. "Decomposing the effects of financial liberalization: Crises vs. growth," Journal of Banking & Finance, Elsevier, vol. 30(12), pages 3331-3348, December. citation courtesy of

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