Financial Openness and Financial Development: An Analysis Using Indices

Ozkok, Zeynep (2010): Financial Openness and Financial Development: An Analysis Using Indices.

Abstract

This paper examines the link between financial openness and financial development through panel data analysis on advanced and emerging market countries. Using indices, financial openness together with institutional and educational variables explains a large part of the variation in financial development across countries and over time. Our analysis demonstrates that different indexing strategies serve in finding better measures for financial openness and financial development in comparison to the individual indicators used in the literature. Our principal component type financial openness index conveys a positive effect on financial development independent from the lag structure or specifications used.

• Item Type: MPRA Paper
• Language: English
• Keywords: Financial liberalization; Financial development; Financial openness; Financial markets; Principal component analysis; Dynamic panel data analysis
• Subjects: F - International Economics > F3 - International Finance > F36 - Financial Aspects of Economic Integration; F - International Economics > F6 - Economic Impacts of Globalization > F63 - Economic Development; F - International Economics > F6 - Economic Impacts of Globalization > F65 - Finance; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance

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