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dc.contributor.authorKalemli-Özcan, Sebnemen_US
dc.contributor.authorPapaioannou, Eliasen_US
dc.contributor.authorPeydró, José-Luisen_US
dc.date.accessioned2010-11-03en_US
dc.date.accessioned2011-05-09T09:35:13Z-
dc.date.available2011-05-09T09:35:13Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/45463-
dc.description.abstractWe investigate the effect of financial integration on the degree of international business cycle synchronization. For identfication, we use a confidential database on banks' bilateral exposure over the past three decades and employ a novel bilateral country-pair panel instrumental vari- ables approach. First, we show that conditional on global shocks and country-pair fixed factors countries that become more financially integrated over time have less synchronized growth pat- terns, in line with the standard theories of output fluctuations. Second, to isolate the one-way impact of financial integration on output co-movement and account for measurement error in the financial integration measure, we exploit variation in the transposition dates of the European Union-wide legislative acts (the Directives) from the Financial Services Action Plan (FSAP). These laws are designed to harmonize regulation of financial markets in the European Union. We find that increases in financial integration stemming from regulatory-legislative harmoniza- tion policies in capital markets are followed by more divergent output cycles, even when we condition on monetary unification. Our results contrast with those of the previous empirical studies. We reconcile the different results by showing that the earlier estimates suffer from the standard identification problems.en_US
dc.language.isoengen_US
dc.publisherTÜSİAD-Koç University Economic Research Forum Istanbulen_US
dc.relation.ispartofseriesTÜSİAD-Koç University Economic Research Forum working paper series 1005 [rev.]en_US
dc.subject.jelE32en_US
dc.subject.jelF15en_US
dc.subject.jelF36en_US
dc.subject.jelG21en_US
dc.subject.jelG28en_US
dc.subject.jelO16en_US
dc.subject.ddc330en_US
dc.subject.keywordBanking Integrationen_US
dc.subject.keywordCo-movementen_US
dc.subject.keywordFluctuationsen_US
dc.subject.keywordFinancial Legislationen_US
dc.subject.stwFinanzmarkten_US
dc.subject.stwMarktintegrationen_US
dc.subject.stwInternationale Banken_US
dc.subject.stwBankenpolitiken_US
dc.subject.stwKonjunkturzusammenhangen_US
dc.subject.stwWelten_US
dc.titleFinancial regulation, integration and synchronization of economic activityen_US
dc.typeWorking Paperen_US
dc.identifier.ppn638346924en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:ERF Working Paper Series, TÜSİAD-Koç University Economic Research Forum (ERF)

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