The global deregulation hypothesis

2020 ◽  
Author(s):  
Thomas Oatley ◽  
Bilyana Petrova
Keyword(s):  
Financial Services ◽  
Statistical Tests ◽  
Emerging Market ◽  
Standard Approach ◽  
Emerging Market Economies ◽  
Financial Systems ◽  
Market Economies ◽  
Industrial Democracies

The growth of the American financial services remains a bit of a puzzle. The standard approach, the deregulation hypothesis, posits that the industry expanded in response to national deregulation. Yet, when viewed in a comparative context, US finance was deregulated significantly less than other national financial systems and yet grew significantly more than most. We propose the global deregulation hypothesis as a solution to this puzzle. The hypothesis posits that American finance grew in response to deregulation in Europe and the emerging market economies. The article develops two theoretical mechanisms that link global deregulation to US financialization. It reports statistical tests that support two central implications of the global deregulation hypothesis. First, global deregulation is positively associated with the growth of US financial services, while US deregulation is not. Second, global deregulation is not systematically related to the growth of financial services in other industrial democracies.

Harinder S. Kohli (ed.). Growth and Development in Emerging Market Economies: International Private Capital Flows, Financial Markets and Globalisation. New Delhi: Sage Publication 2008. 369 pages. Hardbound. Indian Rs 695.00.

2008 ◽  
Vol 47 (3) ◽  
pp. 304-305
Author(s):  
Henna Ahsan
Keyword(s):  
Capital Flows ◽  
Growth And Development ◽  
Global Economy ◽  
Emerging Market ◽  
Balance Sheet ◽  
Emerging Market Economies ◽  
New Delhi ◽  
Infrastructure Development ◽  
Market Economies ◽  
Emerging Market Countries

The book discusses the different experiences in Asia and Latin America, while covering the closely related areas under the purview of Emerging Market Economies (EMEs). The first chapter, “Introduction and Overview” has written by Harinder S. Kohli gives an excellent review of the existing literature on the subject. The book discusses six related topics which include nine papers presented at the Emerging Markets Forum Meeting held in Jakarta, Indonesia, in September 2006. The book highlights the main factors of growth and development in Emerging Market Economies (EMEs) now closely related with international capital flows, development of financial market, the countries’ ability to integrate successfully with the global economy through trade and investment and their ability to forge public-private partnerships including infrastructure development. Chapter 2, of the book is an article titled “Global Imbalances, Oil Revenues and Capital Flows to Emerging Market Countries” by Jack Boorman explains the favourable global environment and its impact on capital flows to Emerging Market Countries (EMCs). The EMCs got advantage from this benign global economic environment, such as high economic growth rate, increase in exports, better national balance sheet and increase in foreign exchange reserves, but due to high oil prices the situation has been changed.

Sign in / Sign up

Export Citation Format

Share Document