Pooled mean group approach to test the determinants of financial integration: Evidence from OECD and G20 countries

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Abbasov A.

Research in World Economy, vol.10, no.3, 2019 (Scopus) identifier

  • Publication Type: Article / Article
  • Volume: 10 Issue: 3
  • Publication Date: 2019
  • Doi Number: 10.5430/rwe.v10n3p366
  • Journal Name: Research in World Economy
  • Journal Indexes: Scopus
  • Keywords: Financial globalization, Financial integration, Financial liberalization, Open economies, Open economy macroeconomics
  • Azerbaijan State University of Economics (UNEC) Affiliated: Yes

Abstract

This study investigates the role of financial liberalization, trade integration, economic growth and global financial crisis on financial integration level of selected OECD and G20 countries during the period of 2000-2016. PMG technique has been implemented to estimate the ARDL model. Regression results suggest a statistically significant long run co-integration relationship between financial integration and independent variables. Analysis also concludes that there are both long run and short run positive impact of trade integration level on financial integration level. The study also concludes that the global financial crisis has had a negative influence on global financial integration both in the short run and long run. But according to the regression results the impact of financial liberalization on the actual financial integration level of the countries only appears in the long run. Results also indicate that positive impact of economic growth on financial globalization level appears only in the long run.