Open AccessExchange rate regimes and external financial stability
Author(s) -
Ovidiu Stoica,
Iulian Ihnatov
Publication year - 2016
Publication title -
economic annals/ekonomski anali
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.148
H-Index - 12
eISSN - 1820-7375
pISSN - 0013-3264
DOI - 10.2298/eka1609027s
Subject(s) - exchange rate flexibility , exchange rate , order (exchange) , economics , financial stability , financial crisis , de facto , international economics , financial integration , exchange rate regime , flexibility (engineering) , financial system , financial market , macroeconomics , monetary economics , finance , political science , management , law
Financial stability within the framework of the global financial crisis has become a common topic for researchers and practitioners. In order to analyse the impact of exchange rate regimes on financial stability we use both the de jure and de facto exchange rate classifications. We apply the model to a 1999-2010 annual data sample for 135 countries and territories, grouped by the level of economic development. Our second focus is the investigation of the effects of the exchange rate regimes in three economic integration areas (member countries of the European Union 27, the Southern Common Market, and the Association of Southeast Asian Nations) on financial stability. Our results generally support the central banks’ concerns that the flexibility of exchange rate regimes should be reduced in order to sustain financial stability; however, the findings are not robust when using alternative regime classifications