Did Globalization Influence Credit Market Deregulation?

29 Pages Posted: 9 Jun 2015

See all articles by Peter Eppinger

Peter Eppinger

University of Tuebingen

Niklas Potrafke

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Date Written: May 31, 2015

Abstract

We investigate whether globalization influenced credit market deregulation over the period 1970-2010. Globalization is measured by the KOF indices of globalization. Credit market deregulation is measured by the credit market freedom indicators of the Fraser Institute. The results from both cross-sectional and panel regressions using ordinary least squares indicate a positive correlation between globalization and credit market deregulation. We account for reverse causality by using predicted trade openness as an instrumental variable and show that this approach gives rise to different conclusions. Two-stage least squares estimations do not show that globalization had a causal influence on credit market deregulation.

Keywords: globalization, credit market deregulation, instrumental variables

JEL Classification: F650, F680, G180, G280, F420, C260

Suggested Citation

Eppinger, Peter and Potrafke, Niklas, Did Globalization Influence Credit Market Deregulation? (May 31, 2015). CESifo Working Paper Series No. 5374, Available at SSRN: https://ssrn.com/abstract=2615731

Peter Eppinger

University of Tuebingen ( email )

Niklas Potrafke (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

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