International economic freedoms, banks and the market crisis of 2007-2009

Johnson, William F.
June 2011
Journal of Banking Regulation;Jun2011, Vol. 12 Issue 3, p195
Academic Journal
The objective of this article is to test whether banks in highly regulated countries performed better than banks in less regulated countries during the market crisis of 2007-2009. Bank index returns from 46 countries were examined from 1 October 2007 to 3 March 2009. The analysis revealed that high levels of government and fiscal freedoms, measured by the Heritage foundation freedom rankings, resulted in higher banking index returns that were highly significant. In contrast, high levels of financial freedom from regulation resulted in lower banking index returns that were marginally significant. The results suggest that regulators must find a delicate balance between improving the regulatory structure while not increasing the government or fiscal involvement in the economy. The results also indicate that simply increasing financial regulation will not reduce or eliminate the magnitude of future market crisis as regulation was only marginally significant in explaining banking index returns during the market crises.


Related Articles

  • The EU Primary Challenge: New Regulations of the Financial System towards a Banking Union. DUMITRESCU, Alina Ligia // Knowledge Horizons / Orizonturi ale Cunoasterii;2013, Vol. 5 Issue 3, p22 

    The recent international financial crisis has shown that financial and banking problems of a country may have an impact worldwide. Governments have been faced the difficult decisions to save several major banks with taxpayers' money or accept their bankruptcy, which would have meant financial...

  • At the sharp end of the crunch.  // Credit Management;Feb2009, p13 

    The article focuses on the increase of insolvent companies in Great Britain as well as other Organisation for Economic Co-operation & Development (OECD) countries and non-OECD countries due to global financial crisis. It states that the increase of insolvencies in the region has resulted to...

  • Irish bailout stokes fresh fears on credit rating. Rice, Nick // Fund Strategy;10/4/2010, p8 

    The article reports that the government has injected bailout money into the Anglo Irish Bank and Allied Irish Bank to help in the budget deficit and push the gross domestic product (GDP) up to 32 percent in Ireland.

  • Rethinking the Taxation of the Financial Sector*. Keen, Michael // CESifo Economic Studies;Mar2011, Vol. 57 Issue 1, p1 

    The economic crisis that erupted in 2008 has prompted many countries to rethink, and several already to reform, the taxation of financial institutions. The underlying analytical issues, however, have received almost no attention in the public finance literature. This article explores the...

  • RÉGULATION ET CONFIANCE.  // Revue d'Économie Financière;sep2010, Vol. 100, p111 

    No abstract available.

  • Is Religion an Influential Factor in the Managerial Decision Taken at the Level of Corporate Governance Structures? Diaconu, Paul; Dumitrescu, Dan // Proceedings of the European Conference on Management, Leadership;2012, p120 

    Although the current economic crisis seems far from being over, economist's preliminary conclusion isthat it has been triggered by the lack of morality of large financial institutions in developed countries that haveinfested the world public finance with toxic financial products. This lack of...

  • Latvijas finanÅ¡u tirgus: problÄ“mas, risinājumi. Gods, Uģis // Economic Science for Rural Development Conference Proceedings;2009, Issue 18, p88 

    Financial instability is encoded in the term finance itself -- the flow of valuables in the form of money, which assumes financial autonomy from its material basis. Speculative transactions are a component of the financial system. A market is a spontaneously organised system, and the financial...

  • RELEVANT FACTORS OF THE FINANCIAL SECTOR STABILITY. Lunyakov, Oleg // Socio-Economic Problems & the State;2013, Vol. 8 Issue 1, p133 

    The cause and effect of relevant factors in the development of the financial sector and the level of macroeconomic stability are researched. Key indicators of financial imbalances, the stability of the financial sector, with GDP per capita by application to 29 countries, including Ukraine, are...

  • BUILDING A SOUND FOUNDATION IN CHANGING TIMES. van Voorhis, Scott // Maryland Banker;Second Quarter 2009, p12 

    The article offers tips on how financial institutions will maintain their liquidity and capital amidst economic changes in Maryland. It is suggested that banks must decrease their need for capital by cutting their asset base and consider dropping bad assets. It is also advised to apply for the...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics