Financial crises and liberalization : progress or reversals? / Orkun Saka (University of Sussex and LSE), Nauro Campos (Brunel University London, ETH-Zürich and IZA), Paul De Grauwe (LSE, CEPR, CESifo and CEPS), Yuemei Ji (University College London), Angelo Martelli (LSE) ; IZA Institute of Labor Economics
VerfasserSaka, Orkun ; Campos, Nauro F. ; De Grauwe, Paul ; Ji, Yuemei ; Martelli, Angelo
KörperschaftForschungsinstitut zur Zukunft der Arbeit
ErschienenBonn, Germany : IZA Institute of Labor Economics, June 2019
Elektronische Ressource
Umfang1 Online-Ressource (48 Seiten) : Diagramme
SerieDiscussion paper ; no. 12393
 Das Dokument ist öffentlich zugänglich im Rahmen des deutschen Urheberrechts.
Financial crises and liberalization [4.61 mb]
Verfügbarkeit In meiner Bibliothek
Zusammenfassung (Englisch)

Financial crisis can trigger policy reversals, i.e. they can lead to a process of re-regulation of financial markets. Using a recent comprehensive dataset on financial liberalization across 94 countries for the period between 1973 and 2015, we formally test the validity of this prediction for the member states of the European Union as well as for a global sample. We contribute by (a) using a new up-to-date dataset of reforms and crises and (b) subjecting it to a combination of difference-in-differences and local projection estimations. In the global sample, our findings consistently confirm that crises lead to a reversal of liberal reforms, suggesting that governments react to crises by re-regulating financial markets. However, in a dynamic setting with impulse-responses, we also find that these new regulations are only temporary and a liberalization process restarts a few years after a financial crisis. One decade later, financial markets have returned to their pre-crisis level of liberalization. In the EU sample, however, we do not find sufficient evidence to support these observations.