Did Globalisation Influence Credit Market Deregulation?

18 Pages Posted: 23 Mar 2016

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: March 2016

Abstract

We investigate whether globalisation influenced credit market deregulation over the period 1970–2010. Globalisation is measured by the KOF indices of globalisation. 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 globalisation and credit market deregulation. We account for reverse causality 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 globalisation had a causal influence on credit market deregulation.

Suggested Citation

Eppinger, Peter and Potrafke, Niklas, Did Globalisation Influence Credit Market Deregulation? (March 2016). The World Economy, Vol. 39, Issue 3, pp. 426-443, 2016, Available at SSRN: https://ssrn.com/abstract=2753328 or http://dx.doi.org/10.1111/twec.12282

Peter Eppinger (Contact Author)

University of Tuebingen ( email )

Niklas Potrafke

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

Poschinger Str. 5
Munich, 01069
Germany

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