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Int. J. Financial Stud. 2015, 3(2), 84-101; doi:10.3390/ijfs3020084

Financial Reforms and Financial Fragility: A Panel Data Analysis

Applied Economics Research Centre, University of Karachi, Karachi 75270, Pakistan
Academic Editor: Nicholas Apergis
Received: 12 March 2015 / Revised: 10 April 2015 / Accepted: 15 April 2015 / Published: 24 April 2015
View Full-Text   |   Download PDF [266 KB, uploaded 24 April 2015]

Abstract

This paper explores the relationship between financial reforms, financial liberalization and the quality of banking regulation and supervision for financial fragility by applying a dynamic two-step system generalized method of moments GMM panel estimator technique. The finding of this study is that the financial vulnerability of the banking sector could be affected, not only by bank-specific and macro-specific variables; but also by financial liberalization and banking regulations and supervision policies. The empirical results of this study confirm the evidence that financial reforms and financial liberalization significantly enhance the likelihood of financial fragility while strong banking regulations and supervision have an inverse relationship with financial fragility. The results of this study also explain that the lag value of loan growth and unemployment contribute to enhancing financial fragility while equity to assets ratio, natural log of total assets and share of foreign banks reduce financial vulnerability. View Full-Text
Keywords: financial fragility; financial liberalization; banking regulations and supervision; two-step system GMM financial fragility; financial liberalization; banking regulations and supervision; two-step system GMM
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Iftikhar, S.F. Financial Reforms and Financial Fragility: A Panel Data Analysis. Int. J. Financial Stud. 2015, 3, 84-101.

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Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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