Financial structure, capital openness and financial crisis

Zhai, Weiyang (2020): Financial structure, capital openness and financial crisis.

Abstract

This paper examines how the financial structure and capital openness of a country have affected the likelihood of financial crisis over the past two decades. By applying a panel probit estimation to a sample of 38 countries, we find the following. 1) An economy with a more market-based financial structure is less likely to experience a currency crisis. 2) More capital openness is associated with a lower probability of a currency crisis. 3) Countries with a more market-based financial structure are also less likely to experience a currency crisis if that structure is coupled with a more open capital account. 4) Unlike what is found for currency crises, neither financial structure nor capital openness has any effect on banking crises.

• Item Type: MPRA Paper
• Language: English
• Keywords: financial structure; capital openness; currency crisis; banking crisis
• Subjects: G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation

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