Financial Integration And Financial Development In Transition Economies : What Happens During Financial Crises ?

This paper provides an empirical analysis of the role of financial development and financial integration in the growth dynamics of transition countries. The authors focus on the role of financial integration in determining the impact of financial development on growth, distinguishing "Normal times" from periods of financial crises. In addition to confirming the significant positive effect on growth exerted by financial development and financial integration, the estimates show that a higher degree of financial openness tends to reduce the concretionary effect of financial crises, by cushioning the effect on the domestic supply of credit.