This study provides a systematic analysis of the empirical literature on the relationship between financial liberalisation and economic growth by conducting a meta-analysis, based on 441 t-statistics reported in 60 empirical studies. To our knowledge, this is the first study using meta-analysis as a tool to investigate the financial liberalisation-growth nexus. We focus on explaining the heterogeneity of results reported in the studies in our sample, investigating the importance of study-, data- and method-specific characteristics. Although our results indicate that, on average, there is a positive effect of financial liberalisation on growth, the significance of this effect is only weak. Next, we find that most of the variables that may help explaining the heterogeneity of results regarding the relationship between financial liberalisation and economic growth do not produce any significant results. There are two exceptions. Our analysis suggests that financial liberalisation policies carried out during the 1970s seem to have a stronger negative relationship with growth. Moreover, our results show that studies that take into account a measure of the level of development of the financial system report lower t-statistics for the relationship between liberalisation and growth.
Bumann, S.; Hermes, N.; Lensink, R. Financial liberalisation and economic growth: A meta-analysis. EPPI-Centre, Social Science Research Unit, Institute of Education, University of London, London, UK (2012) iv+67 pp. ISBN 978-1-907345-40-1