Thresholds in the Process of International Financial Integration
The financial crisis has re-ignited the fierce debate about the merits of financial globalization and its implications for growth, especially for developing countries. The empirical literature has not been able to conclusively establish the presume...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091207085211 http://hdl.handle.net/10986/4342 |
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okr-10986-43422021-04-23T14:02:17Z Thresholds in the Process of International Financial Integration Kose, M. Ayhan Prasad, Eswar S. Taylor, Ashley D. DEBT LIABILITIES DOMESTIC SAVINGS FINANCIAL GLOBALIZATION FINANCIAL INTEGRATION FOREIGN DIRECT INVESTMENT GOVERNANCE INSTITUTIONAL CAPACITY LIBERALIZATION MARKET DEVELOPMENT RISK SHARING TRADE The financial crisis has re-ignited the fierce debate about the merits of financial globalization and its implications for growth, especially for developing countries. The empirical literature has not been able to conclusively establish the presumed growth benefits of financial integration. Indeed, a new literature proposes that the indirect benefits of financial integration may be more important than the traditional financing channel emphasized in previous analyses. A major complication, however, is that there seem to be certain "threshold" levels of financial and institutional development that an economy needs to attain before it can derive the indirect benefits and reduce the risks of financial openness. This paper develops a unified empirical framework for characterizing such threshold conditions. The analysis finds that there are clearly identifiable thresholds in variables such as financial depth and institutional quality -- the cost-benefit trade-off from financial openness improves significantly once these threshold conditions are satisfied. The findings also show that the thresholds are lower for foreign direct investment and portfolio equity liabilities compared with those for debt liabilities. 2012-03-19T19:14:24Z 2012-03-19T19:14:24Z 2009-12-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091207085211 http://hdl.handle.net/10986/4342 English Policy Research working paper ; no. WPS 5149 4663 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
DEBT LIABILITIES DOMESTIC SAVINGS FINANCIAL GLOBALIZATION FINANCIAL INTEGRATION FOREIGN DIRECT INVESTMENT GOVERNANCE INSTITUTIONAL CAPACITY LIBERALIZATION MARKET DEVELOPMENT RISK SHARING TRADE |
| spellingShingle |
DEBT LIABILITIES DOMESTIC SAVINGS FINANCIAL GLOBALIZATION FINANCIAL INTEGRATION FOREIGN DIRECT INVESTMENT GOVERNANCE INSTITUTIONAL CAPACITY LIBERALIZATION MARKET DEVELOPMENT RISK SHARING TRADE Kose, M. Ayhan Prasad, Eswar S. Taylor, Ashley D. Thresholds in the Process of International Financial Integration |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 5149 |
| description |
The financial crisis has re-ignited the
fierce debate about the merits of financial globalization
and its implications for growth, especially for developing
countries. The empirical literature has not been able to
conclusively establish the presumed growth benefits of
financial integration. Indeed, a new literature proposes
that the indirect benefits of financial integration may be
more important than the traditional financing channel
emphasized in previous analyses. A major complication,
however, is that there seem to be certain
"threshold" levels of financial and institutional
development that an economy needs to attain before it can
derive the indirect benefits and reduce the risks of
financial openness. This paper develops a unified empirical
framework for characterizing such threshold conditions. The
analysis finds that there are clearly identifiable
thresholds in variables such as financial depth and
institutional quality -- the cost-benefit trade-off from
financial openness improves significantly once these
threshold conditions are satisfied. The findings also show
that the thresholds are lower for foreign direct investment
and portfolio equity liabilities compared with those for
debt liabilities. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Kose, M. Ayhan Prasad, Eswar S. Taylor, Ashley D. |
| author_facet |
Kose, M. Ayhan Prasad, Eswar S. Taylor, Ashley D. |
| author_sort |
Kose, M. Ayhan |
| title |
Thresholds in the Process of International Financial Integration |
| title_short |
Thresholds in the Process of International Financial Integration |
| title_full |
Thresholds in the Process of International Financial Integration |
| title_fullStr |
Thresholds in the Process of International Financial Integration |
| title_full_unstemmed |
Thresholds in the Process of International Financial Integration |
| title_sort |
thresholds in the process of international financial integration |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091207085211 http://hdl.handle.net/10986/4342 |
| _version_ |
1764391006762958848 |