In light of the financial crises in the emerging markets, the coming-into-force of the financial services agreement under the GATS has been considered a success. While the agreement provides for little new liberalization but rather formalizes the status quo, it has been feared that governments could even backtrack on previous commitments in the belief that more open markets could increase the d...

This paper shows that the effects of financial liberalization on the credit market of a small and capital constrained economy depend on the market structure of domestic banks prior to liberalization. Specifically, under perfect competition in the domestic credit market prior to liberalization, liberalization leads to lower domestic interest rates, in turn leading to increased credit penetration...

in this paper, the effect of financial liberalization on household’s budget liquidity constraint is analyzed with the use of an error correction model. financial liberalization will decline liquidity constraint, with expanding means of making future incomes available for present consumption. here a financial liberalization index for iran is defined using principal component analysis technique, ...

We examine what is perceived as one of the main culprits in the occurrence of banking crises: financial liberalization. As is typically argued, if liberalization is accompanied by insufficient prudential supervision of the banking sector, it will result in excessive risk taking by financial intermediaries and a subsequent crisis. Having evaluated the empirical validity of this hypothesis, we co...

abstract financial crises and currency instabilities within developing and emerging economies during the last decade had a tremendous impact on the economic performance and increased vulnerability of economies against domestic and foreign shocks. the timing of capital liberalization is one of the significant debates among other issues related to currency instability, and it would be more conven...

Stock market liberalizations lead private investment booms. In a sample of 11 developing countries that liberalized, 9 experience growth rates of private investment above their non-liberalization median in the first year after liberalizing. In the second and third years after liberalization this number is 10 of 11 and 8 of 11 respectively. The mean growth rate of private investment in the three...

In the middle of two crises, the first one in 1982 and a second one in 1986, Mexico initiated a new economic strategy, inaugurated with two important reforms: trade liberalization, and financial liberalization and deregulation. With the first reform the economic wanted to reposition Mexico in the international division of labor. With the second one they aimed at attracting capital inflows and m...