Volume 8, Issue 4 (fall 2013)                   J. Mon. Ec. 2013, 8(4): 137-157 | Back to browse issues page

XML Print

Abstract:   (3509 Views)

This paper investigates the role of economic freedom in banking stability by using a panel data set for the period 1998-2013 in 43 selected countries. We turn our investigation to the effects of economic freedom on banking stability. The effects of economic freedom on financial stability are estimated. This paper calculates the z-score measure for banking stability. The findings from this study seem to suggest that overall economic freedom has positive impacts on the banking stability in the selected countries. The positive sign of the coefficient indicates that higher (lower) freedom on the activities that banks can undertake increases (reduces) banks’ stability, which is consistent with the view that less regulatory control allows banks to engage in various activities enabling banks to exploit economies of scale and make income from non-traditional sources. Furthermore, higher freedom on entrepreneurs helps to start businesses and job creation and consequently, increases intermediation performance which increases banks’ stability.

Full-Text [PDF 356 kb]   (2167 Downloads)    
Type of Study: Original Research - Theoric | Subject: Economics
Received: 25 Jun 2016 | Accepted: 25 Jun 2016 | Published: 25 Jun 2016

Rights and permissions
Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.