Financial Reform : What Shakes it? What Shapes it?

Author/Editor:

Ashoka Mody ; Abdul d Abiad

Publication Date:

April 1, 2003

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Despite stops, gaps, and reversals, financial reforms advanced worldwide in the last quarter century. Using a new index of financial liberalization, we conclude that influential events shook the status quo, inducing both reforms and reversals, while learning, more so than ideology and country structure, shaped and sustained widespread reforms. Among shocks, a decline in global interest rates and balance of payments crises strengthened reformers; banking crises were associated with reversals, while new governments brought about both reforms and reversals. Learning occurred domestically-initial reforms raised the likelihood of further reforms-and through observing regional reform leaders. Among structural features, greater openness to trade appears to have increased the pace of financial reform.

Series:

Working Paper No. 03/70

Subject:

English

Publication Date:

April 1, 2003

ISBN/ISSN:

9781451849172/1018-5941

Stock No:

WPIEA0702003

Format:

Paper

Pages:

40

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