The relationship between Financial liberalization, Financial Stability and Capital Control: Evidence from a multivariate framework for developing countries

Nabila Boukef Jlassi () and Helmi Hamdi

MPRA Paper from University Library of Munich, Germany

Abstract: We analyze the dynamic relationship between financial liberalization and financial stability for a panel of 25 developing countries during the period 1986-2010. The empirical study employs the Toda and Yamamoto's (1995) procedure to test for the Granger no-causality between the six variables of our study including: credit-to-GDP ratio, deposit to credit ratio, net interest margin , bank supervision, Liberalization measured by kaopen and capital control proxied by the Quinn index (2007). The results show a first bidirectional causal relationship between financial stability and deposit to credit ratio, a second one between financial stability and capital control and a third one between financial stability and liberalization.

Keywords: Liberalization; capital control; Developing countries; Toda and Yamamoto (search for similar items in EconPapers)
JEL-codes: E58 G0 G01 G28 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cba and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:64328

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