Financial Reform: What Shakes it? What Shapes it?

April 1, 2003

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Format: Chicago

Ashoka Mody, and Abdul d Abiad. Financial Reform: What Shakes it? What Shapes it?, (USA: International Monetary Fund, 2003) accessed September 19, 2024

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.

Subject: Banking crises, Economic sectors, Financial crises, Financial institutions, Financial regulation and supervision, Financial sector, Financial sector reform, Interest rate policy, Legal support in revenue administration, Monetary policy, Multilateral development institutions

Keywords: Balance of payments, Banking crises, Centrist government, Country dummy, Financial reform, Financial sector, Financial sector reform, Global, Interest rate policy, Left-wing government, Liberalization experience, Liberalization process, Multilateral development institutions, Policy liberalization, Policy reform, Policy regime, Political economy, Political orientation, Reform momentum, Reform process, Right wing, Status quo, Status quo bias, WP

Publication Details

Pages:

40
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/070
Stock No:

WPIEA0702003
ISBN:

9781451849172
ISSN:

1018-5941

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