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dc.contributor.authorBarrell, R-
dc.contributor.authorKarim, D-
dc.contributor.authorVentouri, A-
dc.identifier.citationEconomics and Finance Working Paper, Brunel University: 13-06, Mar 2013en_US
dc.description.abstractWe characterize the effects of financial liberalization indices on OECD banking crises, controlling for the standard macro prudential variables that prevail in the current literature. We use the Fraser Institute’s Economic Freedom of the World database. This yields a variable that captures credit market regulations which broadly measures the restrictions under which banks operate. We then test for the direct impacts of some of its components, deposit interest rate regulations and private sector credit controls, on crisis probabilities and their indirect effects via capital adequacy. Over the period 1980 – 2012, we find that less regulated markets are associated with a lower crisis frequency, and it appears that the channel comes through strengthening the defence that capital provides. Deposit interest rate liberalisation adds to the strength of capital in protecting against crises. However, private sector credit liberalisation, appears to increase the probability of having a crisis, albeit not significantly. If policy makers are concerned about the costs of low risk events, they may wish to control private sector credit even if it has a probability of affecting significantly crises of between 10 and 20 per cent.en_US
dc.publisherBrunel Universityen_US
dc.subjectBanking crisesen_US
dc.subjectCurrent accounten_US
dc.subjectFinancial liberalisationen_US
dc.titleFinancial liberalization and capital adequacy in models of financial crisesen_US
pubs.organisational-data/Brunel/Brunel Active Staff-
pubs.organisational-data/Brunel/Brunel Active Staff/School of Social Sciences-
pubs.organisational-data/Brunel/Brunel Active Staff/School of Social Sciences/Economics and Finance-
Appears in Collections:Economics and Finance
Dept of Economics and Finance Research Papers

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