Capital markets, Financial globalization, Monetary policy -- Asia
I investigate whether financial openness leads to financial development after controlling for the level of legal/institutional development, and whether trade opening is a precondition for financial opening, focusing on Asia. Utilizing a panel encompassing 87 less developed countries over the period 1980 to 2000, I find that a higher level of financial openness spurs equity market development only if a threshold level of legal development has been attained, a condition prevalent particularly among emerging market Asian countries. On the issue of sequencing, trade openness is found to be a prerequisite for successful inducement of financial development via capital account liberalization.
Ito, Hiro, "Financial Development and Financial Liberalization in Asia: Thresholds, Institutions and the Sequence of Liberalization" (2005). Economics Faculty Publications and Presentations. 59.