Does Financial Openness Lead to Deeper Domestic Financial Markets?

Calderó ; n, Cé ; sar ; Kubota, Megumi

关键词: ACCOUNTING;    ACCOUNTING STANDARDS;    ACCUMULATION OF DEBT;    ADVANCED COUNTRIES;    ADVERSE SELECTION;   

DOI  :  10.1596/1813-9450-4973
RP-ID  :  WPS4973

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Advanced and emerging market economieshave rapidly integrated into international capital marketsand this growing globalization of financial markets has ledto some important changes in the patterns of saving andinvestment across the world. The main goal of this paper isto test whether the cross-border asset trade has led toimprovements in the intermediation of these savings -- thatis, foster development of domestic financial markets. Theauthors have collected annual information on financialmarket development, financial openness, and other controlvariables for a sample of 145 countries for the period1974-2007. Controlling for the likely endogeneity offinancial openness, the analysis finds that rising financialopenness expands private credit, bank assets, and stockmarket and private bond market development, and generatesefficiency gains in the banking system.However, the impactof financial openness on domestic financial development maydepend on the level of institutional quality, the extent ofinvestor protection, and the degree of trade openness. Ingeneral, rising financial openness will enlarge the size andactivity of financial intermediaries, improve efficiency inthe banking system, and contribute to deepen private bondmarkets in countries with moderate to high levels ofinstitutional quality and investor protection as well as incountries with high trade openness.