Assessing the Growth Effect of Financial Liberalization in the Presence of Financial Crises: A Case Study of Tiger Cub Economies

摘要

By applying a recently developed econometric technique, the synthetic control method (SCM), this paper empirically assesses the growth effect of financial liberalization in the presence of financial crises for the so-called Tiger Cub Economies over the period 1975 to 2002. The outcomes of the SCM analyses show that financial liberalization exerted a significant growth effect in Indonesia, Malaysia, and Thailand before the outbreak of the 1997 East Asian financial crisis, while no such growth effect was found for the Philippines for the entire study period. Moreover, after the outbreak of the financial crisis, the growth effects of financial liberalization for Malaysia and Thailand remained significantly higher than those for their synthetic counterparts. However, the growth effect of financial liberalization was not that sturdy in the case of Indonesia following the crisis.