Financial Integration, Productivity and Capital Accumulation

By Alessandra Bonfiglioli. 2008

170 citations recorded by the source corpus.

Understanding the mechanism through which …nancial globalization aects eco- nomic performance is crucial for evaluating the costs and bene…ts of opening …nancial markets. This paper is a …rst attempt at disentangling the eects of …nancial inte- gration on the two main determinants of economic performance: productivity (TFP) and investments. I provide empirical evidence from a sample of 70 countries observed between 1975 and 1999. The results for both de jure and de facto indicators sug- gest that …nancial integration has a positive direct eect on productivity, while it does not directly aect capital accumulation. I control for indirect eects of …nancial globalization through …nancial development and banking and currency crises. While the evidence on …nancial depth as an indirect channel is weak, the results are more robust for …nancial crises: they depress both investments and TFP, and are favored by …nancial integration, though only to a minor extent. The overall eect of …nancial liberalization is positive for productivity and negligible for investments.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/95f8bda8946ddb92139dccb912b2f5878b9fd45c

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

In Finance

Citations in the corpus

Stock market liberalization and innovation (2021, unknown): “These growth effects of liberalization are mainly driven by its impact on factor productivity growth, which has been documented in subsequent studies (e.g., Levine, 2001; Bonfiglioli, 2008; Gupta and Yuan, 2009; Bekaert, Harvey, and Lundblad, 2011).”
Government Debt and Economic Growth (2013, background): “Financial openness is another policy determinant of growth (Alfaro et al., 2004;Bonfiglioli, 2008; Kose, Prasad and Terrones, 2009; Calderon and Fuentes, 2012).”
Do Surges in International Capital Inflows Influence the Likelihood of Banking Crises?: Cross-Country Evidence on Bonanzas in Capital Inflows and Bonanza-Boom-Bust Cycles (2012, unknown): “Similarly, a limitation of Bonfiglioli (2008), Joyce (2010) and other papers based on the stock of foreign liabilities, is the valuation effects embedded in those measures, which render them less than a good proxy for capital inflows.”
Growth, productivity and capital accumulation: The effects of financial liberalization in the case of European integration (2013, background): “…Saint-Paul, 1992).5 In this context, it has been argued that the investigation of the effects of financial integration on productivity and investment proved to have important implications in terms of welfare analysis (Bonfiglioli, 2008; Gourinchas & Jeanne, 2006; Kose, Prasad, Rogoff, & Wei, 2009).”