Reaping the Benefits of Financial Globalization

Last Updated: July 28, 2017

Prepared by the Research Department^*
Approved by Simon Johnson
June 2007

This is a discussion paper prepared by IMF staff. It is not a policy paper of the International Monetary Fund, and any positions taken should not be attributed to the Executive Board or Management of the IMF. This paper should not be reported as representing the views of the IMF.

Full Text (427 Kb pdf file)

Use the free Adobe Acrobat Reader to view the document.

Contents		Page
Executive Summary		3
I. Introduction		4
II. Some Facts on Financial Globalization		8
III. Determinants of Financial Globalization-A Cross-Country Perspective		17
IV. Risk-Sharing Benefits of Financial Globalization-Theory and Practice		20
V. How Does Financial Globalization Affect Stability and Growth?		23
	A. Volatility and the Frequency of Crises	24
	B. Economic Growth	28
VI. Conclusion		35
Appendices:
I. Capital Control Indices		38
II. Case Studies on Financial Account Liberalization		39
Appendix Tables:
1. Country Lists		41
2. Evidence from Selected Case Studies, 1979-2004		42
References		46

^*This paper was prepared under the direction of Jonathan D. Ostry by a team led by Paolo Mauro and comprising Giovanni Dell'Ariccia, Julian di Giovanni, André Faria, Ayhan Kose, Martin Schindler, and Marco Terrones.