Financial reform: What shakes it? What shapes it?

Abdul Abiad, Ashoka Mody

Research output: Contribution to journalReview articlepeer-review

219 Scopus citations

Abstract

What accounts for the worldwide advance of financial reforms in the last quarter century? Using a new index of financial liberalization, we find that influential events shook the policy status quo. Balance-of-payments crises spurred reforms, but banking crises set liberalization back. Falling global interest rates strengthened reformers, while new governments went both ways. The overall trend toward liberalization, however, reflected pressures and incentives generated by initial reforms that raised the likelihood of additional reforms, stimulated further by the need to catch up with regional reform leaders. In contrast, ideology and country structure had limited influence.

Original languageEnglish (US)
Pages (from-to)66-88
Number of pages23
JournalAmerican Economic Review
Volume95
Issue number1
DOIs
StatePublished - Mar 2005
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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