The S-Curve: Understanding the Dynamics of Worldwide Financial Liberalization

Using a novel database of domestic financial reforms in 90 countries from 1973 to 2014, we document that global liberalization followed an S-curve path: were slow and gradual early periods, accelerated during the 1990s, slowed down after 2000. We estimate learning model explains these dynamics. Policymakers updated their beliefs about growth effects by own other countries' experiences. Positive surprises advanced economies helped accelerate belief updating worldwide, leading wave 1990s. The 2008 crisis, however, caused significant reversals.