Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/190239 
Year of Publication: 
2018
Series/Report no.: 
ADBI Working Paper No. 818
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
The People's Republic of China (PRC) is beginning a new wave of financial liberalization, which is necessary to support strong economic growth, but will financial liberalization lead to major financial crises, as happened in many middle-income countries? The empirical examinations conducted in this study suggest that financial liberalization generally lowers financial risks, especially for middle-income economies. Nevertheless, the pace of liberalization, quality of institutions, and regulatory structure also matter for outcomes of financial instability. From these findings, we draw some policy implications for the PRC: (1) further liberalization is important not only for economic growth but also for financial stability; (2) a gradual liberalization approach should work better, focusing on the sequencing of reforms; (3) the quality of institutions, especially strong market discipline, is also important for containing financial risks; and (4) it is better for the central bank to participate in financial regulation.
Subjects: 
financial liberalization
financial crisis
financial instability
JEL: 
G01
G18
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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