Financial Regulation, Financial Globalization and the Synchronization of Economic Activity

By Sebnem Kalemli‐ozcan, Elias Papaioannou, José-Luis Peydró. Social Science Research Network, 2009

358 citations recorded by the source corpus.

We analyze the impact of financial globalization on business cycle synchronization utilizing a proprietary database on banks' international exposure for industrialized countries during 1978- 2006. Theory makes ambiguous predictions and identification has been elusive due to lack of bilateral time-varying financial linkages data. In contrast to conventional wisdom and previous empirical studies, we identify a strong negative effect of banking integration on output synchronization, conditional on global shocks and country-pair heterogeneity. Similarly, we show divergent economic activity as a result of higher integration using an exogenous de-jure measure of integration based on financial regulations that harmonized segmented EU markets.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/d07c0f0964052a222be4223b4823c63a2733a9a3

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Citations in the corpus

Cross-Border Prudential Policy Spillovers: How Much? How Important? Evidence from the International Banking Research Network (2016, background): “7See the discussions of the standard Tinbergen assignment problem by Fischer (2011) and Obstfeld (2014).”
The European Union, the Euro, and Equity Market Integration (2010, background): “While Krueger (2000) finds that labor mobility among member countries did not significantly increase after the elimination of the remaining restrictions in 1993, Nicoletti, Haffner, Nickell, Scarpetta, and Zoega (2001) document that goods prices, especially for tradables, are more similar within the”
Financial Integration, Housing and Economic Volatility (2015, neutral): “…across US states and in the context of liberalization of international capital markets (e.g., Peek and Rosengren, 2000; Morgan, Rime, and Strahan, 2004; Demyanyk, Ostergaard, and Sorenson, 2007; Kalemli-Ozcan, Papaioannou, and Peydró, 2013; Imai and Takarabe, 2011; Cetorelli and Goldberg, 2012).”
Global Financial Cycles and Risk Premiums (2018, background): “…in the residuals can be interpreted as excess comovement of international financial indicators over and above that of international real indicators (for related residualbased approaches to identify excess comovement in financial series see Kalemli-Ozcan et al., 2013; Kallberg et al., 2014).”
Contagion and Banking Crisis - International Evidence for 2007-2009 (2015, background): “…then the global systematic risk exposure of a given banking market may have been reduced during the crisis instead of increased.4 This is akin to the debate around whether increased international financial integration contributes to increased output correlation (Kalemli-Ozcan et al., 2013).”
Capital flows and the international credit channel (2017, background): “As shown by Morais et al. (2015), US and European monetary policies affect the supply of credit from foreign banks to local firms in Mexico.”
The International Bank Lending Channel of Monetary Policy Rates and QE: Credit Supply, Reach‐for‐Yield, and Real Effects (2017, neutral): “Note that a large part of financial globalization occurs through banks (Kalemli-Ozcan, Papaioannou, and Peydro (2013)).”
Mandatory IFRS Reporting and Changes in Enforcement (2013, background): “Alternatively, their effects can be controlled for with separate indicator variables marking the quarters when the directives enter into force (see also Kalemli-Ozcan et al., 2010, 2013; Christensen et al., 2013a).”