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
Koc University
CASE 101
34450 Highway Rumelifeneri
Sariyer Istanbul
Turkey
E-Mail: sebnem.kalemli-ozcan@mail.uh.edu

Elias Papaioannou
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-8169
E-Mail: papaioannou.elias@gmail.com

José-Luis Peydró
Universitat Pompeu Fabra
E-Mail: jose.peydro@gmail.com
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  -