scholarly journals Capital Account Liberalization, Institutional Quality and Economic Growth: Theory and Evidence

2005 ◽  
Author(s):  
Michael Klein
Keyword(s):  
Economic Growth ◽  
Institutional Quality ◽  
Growth Theory ◽  
Capital Account ◽  
Capital Account Liberalization

CAPITAL ACCOUNT, INSTITUTIONAL QUALITY, AND ECONOMIC GROWTH IN MENA COUNTRIES: A GMM APPROACH

2016 ◽  
Vol 11 (04) ◽  
pp. 1650016
Author(s):  
MOHAMED ILYES GRITLI ◽  
FATMA MARRAKCHI CHARFI
Keyword(s):  
Economic Growth ◽  
Negative Impact ◽  
Positive Impact ◽  
Empirical Studies ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Capital Account ◽  
Financial Openness ◽  
Capital Account Liberalization ◽  
Mena Countries

Despite the diversity of theoretical and empirical studies, the question of capital account–economic growth relationship remains a controversial issue. The aim of the paper is to complete the existing evidence focusing on Middle East and North Africa (MENA) countries, while taking into account the institutional quality. In this context, various estimates were made by generalized method of moments (GMM) over the period of 1986–2012 for 11 countries. The results show that corruption and democratic accountability have a significant and negative impact on economic growth if capital account liberalization is enacted. However, the interaction term of bureaucracy quality and financial openness has a significant and positive impact on economic growth. These findings therefore show that the benefits of capital account liberalization are not unconditional, but are likely to depend upon the environment in which the liberalization occurs. Our paper contributes to the recent policy debates on the merits and demerits of capital account liberalization.

scholarly journals Capital account liberalization and income inequality: a panel study of 28 European countries

2021 ◽  
Vol 24 (1) ◽  
Author(s):  
Muhammad Taufik Radhianshah ◽  
Akhmad Syakir Kurnia
Keyword(s):  
Income Inequality ◽  
Panel Study ◽  
Institutional Quality ◽  
Capital Account ◽  
Capital Account Liberalization ◽  
Financial Transaction ◽  
International Scope ◽  
Financial Depth ◽  
Cross Country

Financial globalization has evolved from domestic policy to international scope policy. One of its form is Capital account liberalization which we can observe from the declining number of restrictions among countries for cross-border financial transaction, and the increasing level of capital flow between countries. Europe cross-country financial transaction has been increasing for the last three decades and this increase happened simultaneously with the increase of income inequality as measured with Gini index. This condition gives impression that there is a positive correlation between income inequality and capital account liberalization. This research aims to study whether income inequality corresponds to the increase of capital account liberalization in 28 Europe countries. Furthermore, this research seeks to understand the role of institutional quality and financial depth as threshold variables. By employing System GMM Estimator on balanced panel data, this study finds that capital account liberalization positively correlated with income inequality and institutional quality proven to be important threshold variable. These findings emphasize the urgency for policy maker to consider institutional quality before or during the implementation of capital account liberalization.

Capital Account Liberalization Institutions and Economic Growth in the Emerging World

2021 ◽  
Vol 7 (3) ◽  
pp. 749-756
Author(s):  
Muhammad Atiq-Ur- Rehman ◽  
Furrukh Bashir ◽  
Salyha Zulfiqar Ali Shah ◽  
Muhammad Azhar Bhatti
Keyword(s):  
Economic Growth ◽  
Financial Liberalization ◽  
Emerging Market ◽  
Output Growth ◽  
Capital Account ◽  
Capital Account Liberalization ◽  
Policy Makers ◽  
Institutional Variables ◽  
Institutional Infrastructure ◽  
The Impact

Purpose: The relationship between capital account liberalization and economic growth has been a fervently discussed subject among economists and policy-makers. The role of institutions is imperious to comprehensively investigate the impact of financial openness on growth. The objective of the study is to inspect the nexus between financial liberalization and economic growth after incorporating the contribution of institutional quality. Methodology: A panel of data on 17 emerging market economies (EMEs) is used for the period 1995-2019. We employ the GMM technique by using different de facto and de jure measures of financial liberalization along with institutional variables. Findings: The empirical results illustrate that better quality institutions strengthen the connection between capital account liberalization and output growth in the emerging World. Implications: The policymakers should focus on the more beneficial nature of financial liberalization such as FDI. Also, the policy should be aiming at availing the services of efficient human resources with proper institutional infrastructure.

Financial Liberalization, Banking Crises and Economic Growth: The Case of South Mediterranean Countries

2012 ◽  
Vol 12 (3) ◽  
pp. 1850264 ◽  
Author(s):  
Ousama Ben Salha ◽  
Tarek Bouazizi ◽  
Chaker Aloui
Keyword(s):  
Economic Growth ◽  
Financial Liberalization ◽  
Banking Crises ◽  
Capital Account ◽  
Negative Effects ◽  
Capital Account Liberalization ◽  
Dynamic Panel Model ◽  
Mediterranean Countries ◽  
Trade Opening ◽  
Equity Market Liberalization

The central aim of this paper is to empirically assess the effects of financial liberalization on economic growth in the presence of banking crises. Our empirical investigation is based on a dynamic panel model for a sample of 10 South Mediterranean countries during the period 1980-2005. Results suggest that equity market liberalization positively affects economic growth in these countries, especially in the period of fragility and banking crises. Capital account liberalization, however, has no significant effects. As expected, banking crises exert negative effects on economic growth. When we control for the presence of macroeconomic stability and appropriate openness sequencing, the anticipated effects of capital account liberalization become significant. We conclude that macroeconomic reforms and trade opening are both crucial prerequisites for the success of the capital account liberalization process.

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