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on Financial Development and Growth |
| By: | Ashoka Mody; Abdul Abiad; Daniel Leigh |
| Abstract: | Recent studies conclude that the ongoing global financial integration may have had little or no value in advancing economic growth, especially in poor countries. Capital is often found to flow "uphill" from poor to rich countries. And, when it does flow into the less developed economies, it is negatively correlated with growth, calling into question the desirability of foreign capital. In this paper we report that Europe-including the new member states of the European Union-provides a counterexample to these global anomalies. With increasing financial integration, capital in Europe has traveled "downhill" from rich to poor countries, and has done so with gathering strength. These inflows have been associated with significant acceleration of income convergence. |
| Keywords: | Current account deficits , financial integration , growth , convergence , Current account deficits , Europe , Globalization , Capital inflows , Economic growth , Income distribution , |
| Date: | 2007–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/64&r=fdg |
| By: | Gianni De Nicoló; Alexander F. Tieman |
| Abstract: | This paper assesses changes in synchronization of real activity and financial market integration in Western Europe and evaluates their implications for financial stability. We find increased synchronization of real activity since the early 1980s and increased equity markets integration since the early 1990s. We also find that measures of systemic risk at large European financial institutions have not declined during the period 1990-2004 and that bank systemic risk profiles have converged. At the same time, the sensitivity of bank and insurance systemic risk measures to common real and financial shocks has increased in most countries. Overall, these results suggest that the integration process does not necessarily entail an unambiguously positive effect on financial stability. |
| Keywords: | Financial stability , economic integration , Europe , Financial stability , Europe , European Union , Economic models , |
| Date: | 2007–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/296&r=fdg |