Financial structure in the age of Globalization

Abstract

Using a large panel dataset covering 150 countries over the period 1990-2010, this paper aims to address the question of how financial structure changes when economies are liberalised and access international capital markets. Specifically, in this study, globalisation is characterised not only by trade and financial integration but also by other important aspects, such as social globalisation, political globalisation and cultural globalisation as well. Our empirical results, by and large, support globalisation's impacts on financial structure, which are, however, diverse and strongly depend on the way to measure globalisation and financial structure. The empirical finding also reveals a dynamic change in financial structure after the globalisation process, except the case of low-income countries, in which financial structure seems to be not correlated with either globalisation process or other macroeconomic variables.