Financial Reform: What Shakes it? What Shapes it?

By Abdul Abiad, A. Mody. Social Science Research Network, 2003

490 citations recorded by the source corpus.

What accounts for the worldwide advance of financial reforms in the last quarter century? Using a new index of financial liberalization, we find that influential events shook the policy status quo. Balance-of-payments crises spurred reforms, but banking crises set liberalization back. Falling global interest rates strengthened reformers, while new governments went both ways. The overall trend toward liberalization, however, reflected pressures and incentives generated by initial reforms that raised the likelihood of additional reforms, stimulated further by the need to catch up with regional reform leaders. In contrast, ideology and country structure had limited influence.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/2ddf3c38760a7a46d303b34fc15207a0c34a5eea

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Citations in the corpus

A New Database of Financial Reforms (2008, methodology): “An earlier version of this database, used in Abiad and Mody (2005), had six rather than seven dimensions.”
Finance and inequality: The case of India (2010, unknown): “We use dummy variables to represent policy changes in these dimensions.5 In constructing the third summary measure of financial liberalization, we follow the approach of Abiad and Mody (2005).”
Financial reforms and income inequality (2012, methodology): “In addition, Abiad and Mody (2005) show that discrete event or “shocks”, “learning” and structural features (such as the legal system or the political institutions) can be important drivers of financial reforms.”
Assessing and Managing Rapid Credit Growth and the Role of Supervisory and Prudential Policies (2005, unknown): “23 These measures are steps back in the process of financial liberalization that took place worldwide during the past decades; see Abiad and Mody (2003).”
Assessing Measures of Financial Openness and Integration (2011, background): “Abiad and Mody’s (2005) and Mody and Murshid’s (2005) financial integration index uses four of the AREAER table variables: capital account restrictions, current account restrictions, export proceeds surrender requirements, and presence of multiple exchange rates.”
The political economy of reforms in central bank design: evidence from a new dataset (2018, unknown): “(2006) find that countries are more likely to stabilize their government deficits during crisis periods, while Abiad and Mody (2005) show that financial sector liberalization reforms tend to occur following balance-ofpayments crises, but are less likely after banking crises episodes. Gokmen et al. (”
Credit Growth in Central and Eastern Europe: New (Over)Shooting Stars? (2006, methodology): “Because the fi nancial liberalization indices ( finlib) used in Abiad and Mody (2003) and Cottarelli et al. (2005) only partially match our country and time coverage, we use in addition two variants of the spread between lending and deposit rates (spread=i/i and spread2=i–i) to capture fi nancial li”
ALFRED MARSHALL LECTURE SHAREHOLDER PROTECTION, STOCK MARKET DEVELOPMENT, AND POLITICS (2006, background): “Indeed, in their study of financial liberalizations Abiad and Mody (2005) documents both high persistence of the status quo and sharp regulatory regime changes in response to sufficiently large shocks.”