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Financial liberalization, exchange‐rate regime, and banking crisis likelihood
Author(s) -
Richey Greg M.
Publication year - 2019
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.1705
Subject(s) - exchange rate , economics , financial crisis , liberalization , exchange rate regime , monetary economics , financial system , international economics , macroeconomics , market economy
This paper provides empirical evidence of the impact that financial liberalization plays, within various exchange rate regimes, on the likelihood of systemic banking crisis. Using a sample of 50 banking crisis episodes over the period of 1985–2005, I investigate the impact of financial liberalization and exchange‐rate regime on the likelihood of systemic banking crisis. When interacted with an overall financial liberalization measure, exchange‐rate regime was significant and positive under a flexible regime. Other empirical results show that when interacted with financial liberalization dimensions, exchange‐rate regime variables produced significant results under intermediate and flexible exchange‐rate regimes.