Is the relationship between financial globalization and financial stability heterogeneous? Evidence from emerging markets and developing economies

IF 2.9 3区经济学 Q2 BUSINESS, FINANCE

Journal of Multinational Financial Management Pub Date : 2025-01-31 DOI:10.1016/j.mulfin.2025.100899

Sunny Kumar Singh , Salva

{"title":"Is the relationship between financial globalization and financial stability heterogeneous? Evidence from emerging markets and developing economies","authors":"Sunny Kumar Singh , Salva","doi":"10.1016/j.mulfin.2025.100899","DOIUrl":null,"url":null,"abstract":"<div><div>This paper examines the association between financial stability and financial globalization for 59 emerging markets and developing countries (EMDEs) from 2000 to 2019. Our findings from the baseline model reveal that the relationship between financial stability and financial globalization varies, depending on dimensions of financial globalization (overall, <em>de facto</em>, <em>de jure</em>) and financial stability. The relationship shows nonlinear and heterogeneous patterns across quantiles of financial stability, characterized by well-defined extreme points within the data range. Specifically, by employing panel quantile regression technique, we find that financially unstable countries (lower quantiles of financial stability) exhibit a U-shaped relationship between dimensions of financial globalization and financial stability. In comparison, an inverted U-shaped relationship appears for financially stable countries. Further, we find that countries with weak institutional and financial development exhibit U-shaped relations, experiencing initial instability followed by stability. Conversely, financial stability initially improves for countries with strong institutional and financial development but declines as integration deepens. These findings underscore the importance of strengthening institutions to harness the benefits of financial globalization while mitigating associated risks.</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"77 ","pages":"Article 100899"},"PeriodicalIF":2.9000,"publicationDate":"2025-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Multinational Financial Management","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1042444X25000039","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}

引用次数: 0

Abstract

This paper examines the association between financial stability and financial globalization for 59 emerging markets and developing countries (EMDEs) from 2000 to 2019. Our findings from the baseline model reveal that the relationship between financial stability and financial globalization varies, depending on dimensions of financial globalization (overall, de facto, de jure) and financial stability. The relationship shows nonlinear and heterogeneous patterns across quantiles of financial stability, characterized by well-defined extreme points within the data range. Specifically, by employing panel quantile regression technique, we find that financially unstable countries (lower quantiles of financial stability) exhibit a U-shaped relationship between dimensions of financial globalization and financial stability. In comparison, an inverted U-shaped relationship appears for financially stable countries. Further, we find that countries with weak institutional and financial development exhibit U-shaped relations, experiencing initial instability followed by stability. Conversely, financial stability initially improves for countries with strong institutional and financial development but declines as integration deepens. These findings underscore the importance of strengthening institutions to harness the benefits of financial globalization while mitigating associated risks.

查看原文本刊更多论文

求助全文

约1分钟内获得全文求助全文

来源期刊

Journal of Multinational Financial Management BUSINESS, FINANCE-

CiteScore

7.30

自引率

4.80%

发文量

审稿时长

30 days

期刊介绍： International trade, financing and investments have grown at an extremely rapid pace in recent years, and the operations of corporations have become increasingly multinationalized. Corporate executives buying and selling goods and services, and making financing and investment decisions across national boundaries, have developed policies and procedures for managing cash flows denominated in foreign currencies. These policies and procedures, and the related managerial actions of executives, change as new relevant information becomes available. The purpose of the Journal of Multinational Financial Management is to publish rigorous, original articles dealing with the management of the multinational enterprise. Theoretical, conceptual, and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • Foreign exchange risk management • International capital budgeting • Forecasting exchange rates • Foreign direct investment • Hedging strategies • Cost of capital • Managing transaction exposure • Political risk assessment • International working capital management • International financial planning • International tax management • International diversification • Transfer pricing strategies • International liability management • International mergers.