Financial Liberalization and Financial Fragility 1917.
Banking crises are more likely to occur in liberalized financial systems.
They find that banking crises are more likely to occur in liberalized financial systems. They examine evidence on the behavior of bank franchise values after liberalization. They also examine evidence on the relationship between financial liberalization, banking crises, financial development, and growth. The results support the view that, even in the presence of macroeconomic stabilization, financial liberalization should be approached cautiously in countries where institutions to ensure legal behavior, contract enforcement, and effective prudential regulation and supervision are not fully developed. The full report is available in PDF format.