JMCB-FDIC Lecture presented at the FDIC, Washington, DC on September 22, 2005. This lecture draws heavily on material in Chapters 1–7 of my forthcoming book, The Next Great Globalization: How Disadvantaged Nations Can Harness Their Financial Systems to Get Rich. I thank for their helpful comments the following who have commented on this material: Christian Broda, Charlie Calomiris, Jose De Gregorio, Peter Dougherty, Bill Easterly, Barry Eichengreen, Reuven Glick, Steve Haber, Joon-Ho Hahm, Michael Klein, Ross Levine, Geraldo Licondro, Debbie Lucas, Martin Redrado, Dani Rodrick, Maury Obstfeld, Guido Sandleris, Sergio Schmukler, Alan Taylor, Jane Tufts, and participants in seminars at the FDIC, Federal Reserve Bank of New York, New School, Purdue, University of Scranton, University of Delaware, Columbia, and Penn State. I also thank Emilia Simeonova for helpful research assistance. Any views expressed in this paper are those of the author only and not those of Columbia University or the National Bureau of Economic Research.
Is Financial Globalization Beneficial?
Article first published online: 18 APR 2007
Journal of Money, Credit and Banking
Volume 39, Issue 2-3, pages 259–294, March–April 2007
How to Cite
MISHKIN, F. S. (2007), Is Financial Globalization Beneficial?. Journal of Money, Credit and Banking, 39: 259–294. doi: 10.1111/j.0022-2879.2007.00026.x
- Issue published online: 18 APR 2007
- Article first published online: 18 APR 2007
- Received February 28, 2005; and accepted in revised form June 26, 2006.
- financial development;
- financial crises;
- economic growth
This lecture examines whether financial globalization is beneficial to developing countries by first examining the evidence on financial development and economic growth and concludes that financial development is indeed a key element in promoting economic growth. It then asks why if financial development is so beneficial, it often does not occur. It then goes on to examine whether globalization, particularly of the financial kind, can help encourage financial and economic development and argues that it can. However, financial globalization does not always work to encourage economic development because it often leads to devastating financial crises. The issue is thus not whether financial globalization is inherently good or bad, but whether it can be done right.