Academic literature on the topic 'Financial deregulation policies'

Since the 1980s, South Asian countries have been implementing financial market deregulation policies continuously. Although the process of deregulations has been slow, many countries in the region are heading toward a more integrated market despite current global turmoil. Financial market integration in South Asia could have synchronised economic activities of the countries in the region due to the impact of consolidation. This suggests that when the region’s economies grow/contract, all countries could follow the same path demonstrating a co-movement of growth rates among countries. When economic growth rates are similar for a region, it may be easier to formulate economic policies to achieve a common goal. As the political leadership of South Asia has agreed to work towards forming an economic block similar to that of the European Union and ASIAN, examining co-movement of growth rates could shed more lights on the issue of the success of market integration in the region. The objective of this study is to study market integration by analysing financial markets, trade and economic growth data to spot whether there is any co-movement of growth rates among South Asian countries due to financial market deregulation policies implemented so far. As findings show mix results, we used region’s governance indicators to examine further and found that weak governance is a serious problem in the South Asian region.

According to Shaw (1973) and McKinnon (1973), the most important element of economic development is financial liberalization. This action will eliminate the distortion, as what the government of Indonesia did on June 1, 1983 through deregulation of banking. The government eliminated the ceiling of credit and gave a full authority to each bank to determine their interest rates. This study looks up to Fry (1995) model to test McKinnon-Shaw hypothesis. The models were regressed with dummy variable. This effort will give illustration or conclusion of the structural change, that happened specifically caused by environmental or policy changes.Generally, insignificant in the relationship between interest rates in national saving and investment in Indonesia could be caused by financial mechanisms those very long and complex channels. That is why real interest rates could not give effect to national saving directly. Export, especially from oil and gas and foreign debt were growth-stimulating factors. Meanwhile, money supply, which supported by tight money policy and balance budget policy caused Indonesian inflation along those periods. The periodically analysis shows that deregulation of June 1983(PAKJUN) were success to mobilize public fund, encourage investment on real sector, and increase the economic growth, but failed to control the inflation rate. The implementation of October 1988 deregulation (PAKTO) had flourished the establishment of new banks and created good competition among them. The competition had no longer on interest rate. Therefore, it can be said also the easy requirements of establishing banks become contra productive for PAKJUN policy, which had laid to the market mechanism.Basically, either PAKJUN or PAKTO was not policies in which urgently implemented in Indonesia. Those financial deregulations were not supported by the existence of deregulation on real sectors, so that the financial deregulations were not effective to achieve their goals.

The concept of flexicurity denotes the idea of compensating labour market deregulation (i.e. flexibilisation) with advantages in employment security and social security. This article presents a brief history of the concept and an operational definition which leads to indicators for monitoring the effects of flexicurity policies in Europe. Empirical study shows that, contrary to political promises and theoretical considerations, labour market deregulation has totally outweighed social development. The following measures are proposed with a view to overcoming contradictions between several European employment policies: (1) adoption of flexinsurance, which makes the employer's contribution to social security proportional to the flexibility of the contract and/or risk of unemployment, (2) introduction of elements of a basic minimum income, and (3) measures to constrain financial markets.

The latest period of expansion in the international economy has been characterised by the liberalisation of capital movements, the deregulation of major financial markets and the spread of neo-liberal beliefs in the merits of open and competitive trade, the disadvantages of big government and protectionist policies (Hirst, 1997). The rapid advancement of information and communication technology and the growth of knowledge-based economy have led to the gradual replacement of the conventional resource-based economies. ‘A techno-economic paradigm of information and communications technology and the knowledge-based economy has created a new knowledge-elite class that favours free markets in this post-industrial society, characterized by globalization, decentralization, deregulation and privatization’ (Low, 2003: 30–31).

Pakistan is a developing economy, which has adopted Structural Adjustment Programme (SAP) in the form of economic reforms initiated in early 1990s. Economic reforms related to privatisation of state-owned assets, deregulation, confiscation of price controls, trade liberalisation generally and financial reforms (especially to improve quality of financial institutions) particularly. The objective of such reforms was to improve the welfare of society but these reforms never fruited to every livelihood in the country. Perhaps, fruits of economic reforms are eaten up by poor governance, lack of transparency in economic policies, high level of corruption, high burden of internal and external debts and interest rate payments on these debts, weak situation of law and order, and improper implementation of economic policies.

In Korea, there is a big difference in the rise and fall of apartment prices by region, so it is expected that there will be differences in regional economic indexes. So, to capture the housing market conditions, we developed the housing cycle by using the factor-augmented vector autoregressive model (FAVAR). In addition, we estimated the impacts of the Korean government’s housing policies on the housing cycle. The first is a net policy effect model, and the second is a comprehensive model with macroeconomic variables and regional variables. To estimate the effects of the policies, we considered financial, tax, and housing transaction policies. In the net policy effect model, we found that all policies, including an increase in the DTI (debt to income) ratio, the LTV (loan to value) limit, an acquisition tax reduction, a transfer tax deregulation, deregulation of the housing subscription policy, and a housing purchase right transfer, impacted the housing cycles at the period t − 1. This is why the Korean government announced policy enforcement in advance a month ago before policy implementation. In the comprehensive model, we found that the policies had statistically significant effects on housing cycles at the period t − 1, and we also found that the regional variables had an influence on the housing cycle. Therefore, the Korean government should consider the regional characteristics and time lag when it attempts to intervene in the housing market.

The Washington Consensus policies of privatisation and deregulation promoted by the international financial institutions (IFIs) became increasingly controversial during the 1990s, and in 2004 the World Bank's president declared the consensus to be ‘dead’. However, a new push for across-the-board deregulation, notably in the area of workers’ protection, started in 2003 through an annual World Bank publication, Doing Business, which proclaimed a wide range of labour regulations to be nothing more than a hindrance to investment. The IFIs used it to pressure dozens of developing countries to do away with workers’ protection rules, contending that deregulation was necessary to stimulate employment growth, even though the Bank's own internal evaluators were unable to corroborate the claimed link between the Doing Business labour indicator and positive economic outcomes. Faced with mounting pressure from unions, the ILO and elected officials, the Bank finally instructed its staff in 2009 to stop using the indicator and removed it as a conditionality criterion, declaring that the global economic crisis justified adopting a different policy approach.

The nexus between Information Communication Technology (ICT) and stock market development has been predominantly based on studies of the developed markets and high-income economies of the world. The objective of this study was to examine the causal relationship between ICT adoption and stock market development in Africa. The study examined a panel of 11 African stock exchanges for the period 2008–2017 and employed the panel ARDL bounds testing procedure to test for cointegration and examine the causal relationship between ICT adoption and stock market development. The dependent variable employed was the stock market development index (FINDEX), while the independent variable was the ICT adoption index (ICTDEX), and the financial freedom index (FFI) was employed as a control variable. Firstly, the results of the study documented that the variables are cointegrated in the long term. Secondly, the results of the study documented a bi-directional causal relationship (complementarity) between ICT adoption and stock market development. In essence, ICT adoption and stock market development reinforce each other. Thirdly, the study established a causal relationship running from financial freedom to stock market development. This lends credence to the notion that financial market deregulation promotes stock market development. Lastly, a positive causal relationship that ran from financial freedom to stock market development was documented. This study contributes to the body of knowledge in the sense that it is the first study to examine the phenomenon of the ICT–stock market development nexus by employing a panel study. Hitherto, studies were mainly country-specific in nature. The findings of the research imply that policymakers should be more resolute when formulating ICT policies, as ICT adoption can drive stock market development and vice versa for better economic growth. Policymakers should embrace policies that support the deregulation of stock markets as this will lead to the development of the latter.

AbstractUnderstanding the nature of state financialisation is crucial to ensure de-financialisation efforts are successful. Therefore, this article provides a structured overview of the emerging literature on financialisation and the state. We define financialisation of the state broadly as the changed relationship between the state, understood as sovereign with duties and accountable towards its citizens, and financial markets and practices, in ways that can diminish those duties and reduce accountability. We then argue that there are four ways in which financialisation works in and through public institutions and policies: adoption of financial logics, advancing financial innovation, embracing financial accumulation strategies and directly financialising the lives of their citizens. Organising our review around the two main policy fields of fiscal and monetary policy, four definitions of financialisation in the context of public policy and institutions emerge. When dealing with public expenditure on social provisions, financialisation most often refers to the transformation of public services into the basis for actively traded financial assets. In the context of public revenue, financialisation describes the process of creating and deepening secondary markets for public debt, with the state turning into a financial market player. Finally, in the realm of monetary policy, financial deregulation is perceived to have paved the way for financialisation, while inflation targeting and the encouragement, or outright pursuit, of market-based short-term liquidity management among financial institutions constitute financialised policies.

The unprecedented subprime crisis, the deregulation of the market, bank credit and payment mechanisms have facilitated the spread of the risk to the whole of economy. This study examines the issue of the processes set up to save the management of the global banking system. To achieve our goal, we conducted a survey of the various techniques used by banks to prevent global financial crises. At the end of our study, we found that the banks while opting for different policies play the same role and are increasingly hard to avoid risk.

The neo-liberal policies of liberalization and deregulation, as utilized by the International Monetary Fund (IMF) in its dealings with countries of the developing world, tend to facilitate the conditions for financial crisis. This can be traced by examining the economic crises of Mexico in 1982 and 1994/95, Asia in 1997 and Russia in 1998 and looking at the main causes and triggers of these crises. It is evident that the financial vulnerability that these countries suffered from existed due to, and not in spite of, these policy prescriptions. The IMF continues to present these policies as proven successes - a view that this dissertation contests. Further to this, the policies that the Fund uses are formulated for use in semi-peripheral economies and have little relationship to the actual economic environments of peripheral countries such as those of sub-Saharan Africa or Papua New Guinea. The ideology of free-markets and globalization is seen as unassailable by the IMF. By encouraging countries to remain part of the global financial system through debt rescheduling and open-markets policies, the IMF holds an increasingly fragile economic environment together. This dissertation formulates and tests four hypotheses in relation to Mexico, Asia, Russia and Papua New Guinea and the periphery. These are - (1) If there are periods of 'irrational exuberance' among investors in Third World debt, these are likely to contribute to debt crises. (2) If IMF policies are implemented in the Third World as dictated, then their primary benefits will accrue to the elites in those countries and in the developed world. (3) If Third World countries open their economies to foreign capital, then they are more likely to experience debt crises. (4) If IMF policies are implemented in peripheral countries, then they are even less likely to be successful than in semi-peripheral countries.

This thesis uses bank level data from developing countries and emerging economies and the data envelopment analysis (DEA) approach to provide empirical evidence on the impact of deregulation policies in the banking industry on the banks’ efficiency. Since the banking industry in China is the largest and most complex among the developing countries and in transition from a centrally planned to a market economy, its transition process and the development of the banking industry is analysed first in order to provide the background information for the following econometric analyses and the thesis. To gather the empirical evidence from China’s banking industry on the correlation between the World Trade Organization (WTO) accession and efficiency gains by commercial banks, this thesis evaluates the efficiency of Chinese banks over the period 2000–09 (this is referred to as the adapting phase of the WTO accession). During this period of time, the restrictions on the foreign banks were removed gradually. The evolution of banks’ efficiency is computed by the DEA approach combined with the bootstrapping technique. All commercial banks are broken down into four groups: (1) all banks in China; (2) domestic banks; (3) private banks; and (4) city banks. Since the categories are mutually exclusive, the empirical results reveal that the efficiency of the banks in China’s banking industry increased over this period. In terms of profit maximising, city banks were the least efficient banks and the catch-up effect was highly significant in this group, since their efficiency increased dramatically compared with other banks. However, the empirical evidence from the Chinese banking industry cannot identify the efficiency effect from removing restrictions on banks in the market. In order to identify the efficiency impacts from different kind of deregulation policies, first, the impact of the deregulation policies to remove the restrictions on foreign banks and domestic banks are explored in six Asian banking industries over the period 1997–2006, namely China (data for mainland China and Taiwan presented separately), India, Indonesia, Malaysia, Pakistan and Thailand. In the first stage of the two-stage DEA model, the output direction DEA is employed for the selected countries to compute the efficiency of the banks. In the second stage, the estimated DEA score is regressed on the indices of the restrictions in the market. The values of indices are taken from Dinh (2008). The main reason to select her indices is that these indices are used to estimate the restrictions on foreign banks and domestic banks in the given market. The expectation is that the deregulation policies to remove the restrictions on foreign or domestic banks will lead to efficiency gains in the markets. In order to overcome the reverse causality issue between the dependent variable (the estimated DEA score) and the independent variable (restriction indices), the two-step first-difference regression model is used and bank efficiency in the previous period is included in the model as one of control variables. The main reason to use the first-difference model is to partial out unobservable time and country effects from the data panel. In the sensitivity analysis, a couple of different model specifications are utilised to confirm the baseline results. The regression results show that the deregulation policies related to the operation of foreign banks are positively correlated with efficiency gains of commercial banks, but the other key set of policies to liberalise the domestic banks has not resulted in significant efficiency gains in the selected banking industries. As alternative channels for increased competition in the market, the efficiency impacts of mergers and acquisitions (M&As) are explored. Theoretically, banks may be encouraged to enhance their efficiency due to the pressures that arise from the possibility of M&As. Most previous analyses use the case study methodology in this topic rather than the cross-country statistical methodology. In this thesis, the efficiency impacts are examined with a sample of banks from a range of emerging economies (China, India, Malaysia, Russia, Thailand and Vietnam) over the period 2002–09. All banks in the selected countries are divided into three groups, namely target banks, acquiring banks, and the banks not involved in the event (or incumbent banks). To compare the differences in the impacts on efficiency between the banks involved in the event (target and acquiring banks) and the banks not involved in the event (incumbent banks), the two-stage DEA is employed. In the first stage, the efficiency of the banks is calculated in the DEA model. The results from the DEA show that the efficiency of the banks increased in most of the countries, except India, in which the bank efficiency is neutral over the sample period. In the second stage, two different matching methods was utilised in this thesis: the regression method and propensity score matching. The empirical results are robust across a number of sensitivity analyses and identification methods and reveal that the M&As reduce the efficiency of the acquiring banks and target banks in the selected emerging economies.
Thesis (Ph.D.) -- University of Adelaide, School of Economics, 2013

Neoliberalism refers to a set of market-based ideas and policies ranging from government budget cuts and privatization of state enterprises to liberalization of currency controls, higher interest rates and deregulation of local finance, removal of import barriers (trade tariffs and quotas), and an emphasis on promotion of exports. While the effects of these policies have been quite consistent, they have sparked sharp criticism from the left. Critics pointed out the elites’ consistent failure in areas such as development aid, international financial regulation, Bretton Woods reform, the World Trade Organization’s Doha Agenda, and United Nations Security Council democratization. In the wake of the financial crisis of 2007–2008, the G20 held a summit in 2009 to discuss policy issues pertaining to the promotion of international financial stability. G20 leaders vowed to, among other promises, strengthen the longer term relevance, effectiveness and legitimacy of the International Monetary Fund and the World Bank, and to seek agreement on a post–2012 climate change regime. However, many intellectual critics of neoliberalism insisted that the G20 represented nothing new. Instead, they emphasize several urgent political priorities, such as: immediately recall and reorganize campaigning associated with defense against financial degradation; reconsider national state powers including exchange controls, defaults on unrepayble debts, financial nationalization and environmental reregulation, and the deglobalization/decommodification strategy for basic needs goods; and address the climate crisis by rejecting neoliberal strategies in favor of both consumption shifts and supply-side solutions.

The ambition of this book is to explore the various dimensions of the transition from a state-led to a market-led financial system from the 1970s onwards. In the late 1970s and 1980s, the phrase ‘deregulation’ became a particularly popular term in regulatory spheres, but what kind of change exactly deregulation was? The nine chapters of the book show that if some rules were indeed revoked, particularly in certain countries, other regulations were introduced, particularly in the field of prudential supervision. The combination of an increased surveillance and of more liberal rules marked the end of the twentieth century and differentiated this period from the late- nineteenth-century laissez-faire approach. Rising public debt, new monetary policies, globalization, and weak economic growth were often the main factors underlying the deregulatory moves in the financial sector.

This chapter focuses on the rationale and objectives of financial deregulation in Italy from the late 1970s to the early 1990s. Deregulation appears as a complex adjustment process to major changes, within the domestic economy and in the international environment, more than the result of a clear-cut plan. In fact, Italy had to cope with difficulties in the manufacturing sector, an exogenous, anti-inflationary, change in monetary policies and a new European legal framework. Her adjustment process largely depended upon the ability of the Bank of Italy, the central bank, to provide sounding analyses and promote reforms in accordance with the emerging European regulatory framework. In the long regulatory cycle started in the mid-1970s the Bank of Italy acted as the main actor, whilst lawmakers had a minor part until 1990, when a new banking law eventually abolished the Banking Law of 1936 catching up with the second European Banking Directive.

The authors look at the three major global crises; they see state intervention in causes and solutions. The causes of the crisis were deregulation. To resolve the crises, again regulation policies have been applied. Although the causes of the crises seem to have been regulation policies, in fact, the main problem was homo economicus. In conclusion, the authors see that when we analyze the reasons for the three big global crises and the ways to overcome crisis, the reasons are the unethical and irrational behavior of homo economicus. That is why homo economicus must be constrained and obey constitutional financial and monetary rules.

This chapter examines the effects of structural adjustment programs designed under the supervision of IMF and World Bank on labor markets. These leading financial institutions are part of global financial system and they finance countries. In return, the countries satisfy the requirements imposed by IMF and World Bank. The requirements imposed by IMF and World Bank includes devastating measures for labor market, including privatization, deregulation of labor market, and flexibilization. There is convincing evidence that structural adjustment programs slowdown economic growth so hurts employment. Besides, the labor markets started to be constituted by unsafe work places without rules as a result of deregulations and flexibilizations. Most of the workers lost social security and workplace security. Feminization, child labor, increasing work incidents are the main severe results of the policies designed under pressure of IMF and World Bank on labor market.

Despite the spectacular failure of market fundamentalism in Europe and the US, with a seemingly never-ending spate of corporate scandals and financial crises, the grip of a neoliberal economic policy discourse among political and economic elites seems unshakeable. If anything, neoliberal policies of privatisation, labour market deregulation and state and welfare retrenchment seem to have been ratcheted up since the 2008-9 financial crisis. How can a left and more progressive politics– even in the form of a moderate eco-Keynesianism – be reasserted in these circumstances? This chapter argues that there has, until recently, been a serious vacuum in left and progressive circles about alternative economic models that might challenge the mainstream consensus. Cumbers uses the lens of public ownership, and examples from recent research in Denmark and Germany, to argue for the need to remake and re-scale institutional structures and practices on the left to successfully contest neoliberalism and construct more progressive, egalitarian and sustainable economies and societies.

This chapter documents the codification of the politics of global competitiveness in core documents published by the OECD and the World Bank in 2019 and 2020: the OECD’s Employment Outlook 2019: The Future of Work, and the World Bank’s World Development Report 2019: The Changing Nature of Work, and World Development Report 2020: Trading for Development in the Age of Global Value Chains. These documents confirm the commitment of the two institutions, even after the major setback arising from the global financial crisis originating a decade earlier, to a global regime of competitiveness in labour and product markets, underpinned by policies aiming at the distribution of production around the world in accordance with the maximisation of profits, and a constant focus on the development of productivity-enhancing skills. They develop further the need to move away from inflexible and costly labour contracts, and argue for a common system of labour regulation and forms of social protection that incentivise paid work, and selective deregulation to boost the transfer of workers from the informal economy to the formal sector.

By the 1990s the combination of internal deregulation and globalization led to a spectacular growth in the value of financial transactions both inside countries and across borders. There was a commensurate increase in pressure on payment and settlement systems to cope with the huge volume and variety of transactions. All this was of concern to those who regulated financial systems around the world. The speed and extent of the changes taking place, assisted by the advances made in the technology of communication and data handling, forced regulators to search for new ways of coping with the consequences, as the methods of the past were becoming inadequate. Globalization meant that national boundaries could no longer define the parameters within which financial systems operated, as all became integrated into international flows of short-term money and long-term finance. The complexities arose not only from the process of globalization and technological change but also from the disappearance of the barriers that had long separated different components within national financial systems. Rather than serving separate communities banks and financial markets increasingly competed with each other. In the face of these enormous changes regulators turned to the megabanks as a safe and secure way of monitoring and policing global financial markets. There was an implicit belief that the size and sophistication of these megabanks had made them to big to fail or even require the central banks to play a role as lenders of last resort.