Abstract
| Language | English |
|---|---|
| Journal | World Economy |
| DOIs | |
| Publication status | E-pub ahead of print - 14 Aug 2019 |
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Keywords
- banking crisis
- capital restrictions
- financial markets
- financial networks
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Financial integration and banking crisis : A critical analysis of restrictions on capital flows. / Inekwe, John Nkwoma; Valenzuela, Maria Rebecca.
In: World Economy, 14.08.2019.Research output: Contribution to journal › Article › Research › peer-review
TY - JOUR
T1 - Financial integration and banking crisis
T2 - World Economy
AU - Inekwe, John Nkwoma
AU - Valenzuela, Maria Rebecca
PY - 2019/8/14
Y1 - 2019/8/14
N2 - We investigate the effect of financial integration on a banking crisis. In contrast to existing works, we allow for capital restrictions while studying the impact of financial integration on a banking crisis. Using firm-level lending and borrowing information in the global market of syndicated loans; we generate aggregate measures of financial integration and examine how countries with capital flow restrictions thrive in the wake of a banking crisis. We concentrate on basic network measures of integration for a panel of 62 countries that allow for capital restriction at any time within the sample period. Financial integration increases the incidence of a banking crisis and capital restrictions worsen a banking crisis. However, capital restrictions reduce the negative impact of financial integration on the incidence of a banking crisis. Thus, financial integration becomes beneficial when countries allow for some forms of capital control.
AB - We investigate the effect of financial integration on a banking crisis. In contrast to existing works, we allow for capital restrictions while studying the impact of financial integration on a banking crisis. Using firm-level lending and borrowing information in the global market of syndicated loans; we generate aggregate measures of financial integration and examine how countries with capital flow restrictions thrive in the wake of a banking crisis. We concentrate on basic network measures of integration for a panel of 62 countries that allow for capital restriction at any time within the sample period. Financial integration increases the incidence of a banking crisis and capital restrictions worsen a banking crisis. However, capital restrictions reduce the negative impact of financial integration on the incidence of a banking crisis. Thus, financial integration becomes beneficial when countries allow for some forms of capital control.
KW - banking crisis
KW - capital restrictions
KW - financial markets
KW - financial networks
UR - http://www.scopus.com/inward/record.url?scp=85073983086&partnerID=8YFLogxK
U2 - 10.1111/twec.12855
DO - 10.1111/twec.12855
M3 - Article
JO - World Economy
JF - World Economy
SN - 0378-5920
ER -