TY  - JOUR
AU  - Kalemli-Ozcan,Sebnem
AU  - Papaioannou,Elias
AU  - Peydró,José Luis
TI  - Financial Regulation, Financial Globalization and the Synchronization of Economic Activity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14887
PY  - 2009
Y2  - April 2009
UR  - http://www.nber.org/papers/w14887
L1  - http://www.nber.org/papers/w14887.pdf
N1  - Author contact info:
Sebnem Kalemli-Ozcan
Department of Economics
University of Maryland
Tydings Hall 4118D
College Park, MD 20742-7211
Tel: 301/405-3266
E-Mail: kalemli@econ.umd.edu

Elias Papaioannou
London Business School
Regent's Park
Sussex Place
London NW1 4SA
United Kingdom
Tel:  +44 (0) 207000 8432
Fax: +44 (0) 207000 8401
E-Mail: papaioannou.elias@gmail.com

Peydro Alcalde
Universitat Pompeu Fabra
Barcelona
E-Mail: jose-luis.peydro-alcalde@ecb.int
AB  - We analyze the impact of financial globalization on business cycle synchronization utilizing a proprietary database on banks' international exposure for industrialized countries during 1978- 2006. Theory makes ambiguous predictions and identification has been elusive due to lack of bilateral time-varying financial linkages data. In contrast to conventional wisdom and previous empirical studies, we identify a strong negative effect of banking integration on output synchronization, conditional on global shocks and country-pair heterogeneity. Similarly, we show divergent economic activity as a result of higher integration using an exogenous de-jure measure of integration based on financial regulations that harmonized segmented EU markets.
ER  -