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Financial Reform: What Shakes It? What Shapes It?

Author/Editor: Abiad, Abdul | Mody, Ashoka
Authorized for Distribution: April 1, 2003
Electronic Access: Free Full Text (PDF file size is 1,344KB)
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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(s): Economic reform | Financial sector
Author's keyword(s): Financial reform | political economy | status quo bias
 
English  
    Published:   April 1, 2003        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA0702003   Pages:   39
    Price:   US$15.00
       
     
Please address any questions about this title to publications@imf.org.