Paper #988

Títol:

Financial integration, productivity and capital accumulation

Autor:

Alessandra Bonfiglioli

Data:

Setembre 2006

Resum:

Understanding the mechanism through which financial globalization affect economic performance is crucial for evaluating the costs and benefits of opening financial markets. This paper is a first attempt at disentangling the effects of financial integration on the two main determinants of economic performance: productivity (TFP)and investments. I provide empirical evidence from a sample of 93 countries observed between 1975 and 1999. The results suggest that financial integration has a positive direct effect on productivity, while it spurs capital accumulation only with some delay and indirectly, since capital follows the rise in productivity. I control for indirect effects of financial globalization through banking crises. Such episodes depress both investments and TFP, though they are triggered by financial integration only to a minor extent. The paper also provides a discussion of a simple model on the effects of financial integration, and shows additional empirical evidence supporting it.

Paraules clau:

Capital account liberalization, financial development, banking crises, growth, productivity, investments

Codis JEL:

G15, F43, O40, C23

Àrea de Recerca:

Macroeconomia i Economia Internacional

Descarregar el paper en format PDF (306 Kb)