Cover -- Contents -- Foreword -- Acknowledgments -- Contributors -- Introduction -- I. FINANCIAL BOOM-BUST CYCLES -- Chapter 1 Lending Booms and Lending Standards -- 1.1. Introduction -- 1.2. Model -- 1.3. Equilibrium -- 1.4. Macroeconomic Shocks and Banking Crises -- 1.5. Determinants of Equilibrium -- 1.6. The Role of Information Sharing -- 1.7. Conclusion -- Appendix I. Proofs -- Appendix II. An Alternative Model of Information Acquisition -- References -- Chapter 2 Are Weak Banks Leading Credit Booms? Evidence from Emerging Europe -- 2.1. Introduction -- 2.2. Modeling How Bank Soundness Affects Credit Growth -- 2.3. Are Weak Banks Driving Credit Expansions? -- 2.4. Conclusion -- Appendix I. Data Sources and Methodology -- References -- Chapter 3 Growth Dynamics: The Myth of Economic Recovery -- 3.1. Introduction -- 3.2. Methodology -- 3.3. Data -- 3.4. Results -- 3.5. Exogeneity -- 3.6. Conclusion -- References -- Chapter 4 From Subprime Loans to Subprime Growth? Evidence for the Euro Area -- 4.1. Introduction -- 4.2. Empirical Evidence -- 4.3. Quantitative Implications -- 4.4. Conclusion -- Appendix I. Calculating the Distance to Default -- Appendix II. Identifying the Linkage Between Bank Loan Supply and Aggregate Output -- Appendix III. Contingent Claims Analysis: A Primer -- References -- Chapter 5 The Real Effect of Banking Crises -- 5.1. Introduction -- 5.2. Related Literature -- 5.3. The Basic Test -- 5.4. Results -- 5.5. Conclusion -- Data Appendix -- References -- Chapter 6 Systemic Crises and Growth -- 6.1. Introduction -- 6.2. Model -- 6.3. Systemic Risk and Growth: The Empirical Link -- 6.4. Related Literature -- 6.5. Conclusion -- References -- II. FINANCIAL INTEGRATION, FINANCIAL LIBERALIZATION, AND ECONOMIC PERFORMANCE -- Chapter 7 Measuring Financial Integration: A New Data Set -- 7.1. Introduction -- 7.2. The Data Set.

7.3. Empirical Applications -- 7.4. Conclusion -- References -- Chapter 8 The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities, 1970-2004 -- 8.1. Introduction -- 8.2. Methodology -- 8.3. The Dataset: A Global Overview -- 8.4. Selected Empirical Findings -- 8.5. Conclusion -- Appendix I: Country List -- References -- Chapter 9 Reaping the Benefits of Financial Globalization -- 9.1. Introduction -- 9.2. Some Facts on Financial Globalization -- 9.3. Determinants of Financial Globalization: A Cross-Country Perspective -- 9.4. Risk-Sharing Benefits of Financial Globalization: Theory and Practice -- 9.5. How Does Financial Globalization Affect Stability and Growth? -- 9.6. Conclusion -- Appendix I: Country Lists -- Appendix II: Capital Control Indices -- Appendix III: Case Studies on Financial Account Liberalization -- References -- Chapter 10 Financial Globalization: A Reappraisal -- 10.1. Introduction -- 10.2. A Brief Overview of Theory -- 10.3. Measuring Financial Openness -- 10.4. Macroeconomic Evidence on the Effects of Financial Globalization -- 10.5. How Does the Composition of Capital Flows Matter? -- 10.6. Organizing Principles -- 10.7. Collateral Benefits of Financial Globalization -- 10.8. Threshold Effects in the Outcomes of Financial Globalization -- 10.9. Conclusion -- Data Appendix -- References -- Chapter 11 International Financial Integration and Economic Growth -- 11.1. Introduction -- 11.2. Data and Summary Statistics -- 11.3. Methodology -- 11.4. Results -- 11.5. Conclusion -- Appendix I -- References -- Chapter 12 The Quality Effect: Does Financial Liberalization Improve the Allocation of Capital? -- 12.1. Introduction -- 12.2. Financial Liberalization and Q-Dispersion: Theory and Measurement -- 12.3. Data Description and Bivariate Analysis -- 12.4. Panel Regressions.

12.5. Conclusion -- References -- III. POLICY ISSUES -- Chapter 13 Monetary Policy and Asset Prices: Does "Benign Neglect" Make Sense? -- 13.1. Introduction -- 13.2. Identifying Booms and Busts in Asset Prices: The Postwar OECD -- 13.3. A Stylized Model -- 13.4. Conclusion -- References -- Chapter 14 Corporate Governance Quality: Trends and Real Effects -- 14.1. Introduction -- 14.2. The CGQ Index -- 14.3. Trends in Corporate Governance Quality -- 14.4. The Real Effects of Corporate Governance Quality -- 14.5. Conclusion -- Appendix I -- References -- Chapter 15 Country Insurance: The Role of Domestic Policies -- 15.1 Introduction -- 15.2. Insurance Against What? -- 15.3. Sound Fundamentals and Liability Structures -- 15.4. Self-Insurance Through International Reserves -- 15.5. Conclusion -- Appendix I: Data Sources and Definitions -- Appendix II: Behavior of Different Types of Financial Flow -- Appendix III: A Model of Optimal Reserves -- References -- Chapter 16 International Reserves in Emerging Market Countries: Too Much of a Good Thing? -- 16.1. Introduction -- 16.2. The Buildup in International Reserves -- 16.3. An Insurance Model of Optimal Reserves -- 16.4. The Benefits of International Reserves -- 16.5. The Costs of International Reserves -- 16.6. Model Predictions -- 16.7. Discussion -- 16.8. Conclusion -- Appendix I -- Appendix II -- References -- Chapter 17 Policy Responses to Systemic Banking Crises -- 17.1. Introduction -- 17.2. Crisis Dates -- 17.3. Crisis Containment and Resolution -- 17.4. Descriptive Statistics -- 17.5. Global Liquidity Crisis of 2007-08 -- 17.6. Conclusion -- References -- Index -- A -- B -- C -- D -- E -- F -- G -- H -- I -- J -- K -- L -- M -- N -- O -- P -- Q -- R -- S -- T -- U -- V -- W -- Y -- Z -- Boxes -- Box 9.1 Measuring Financial Globalization.

Box 9.2 The Integrated Approach to Capital Account Liberalization -- Box 15.1 Asian Bond Funds -- Box 15.2 Argentina's GDP-Linked Securities -- Box 15.3 State-Contingent Reserves Based on Volatility Index -- Tables -- Table 2.1 Sample Coverage -- Table 2.2 Summary Statistics by Period and Region -- Table 2.3 Simultaneous Modeling of Bank Credit Growth and Distance to Default -- Table 2.4 Credit Growth in the Weakest Banks -- Table 2.5 Differences in Bank Credit Growth in the Baltics and Other CEECs -- Table 2.6 Differences in Credit Growth in Banks with High Exposures to Foreign-Currency Lending and Household Lending -- Table 2.7 Summary Statistics -- Table 2.8 Summary Statistics by Country -- Table 2.9 Variable Description -- Table 3.1 Probability of Shocks -- Table 3.2 Consensus Forecast Errors for Growth -- Table 3.3 Probit Results for Financial and Political Crises -- Table 4.1 Demand and Supply in the Disequilibrium Model, 1997-2007 -- Table 4.2 Ordinary Least Squares Regression of Output on Loans -- Table 4.3 First Stage IV Regression: Loans on Money Demand Shocks -- Table 4.4 Second Stage IV Regression of Output on Loans -- Table 5.1 Summary Statistics -- Table 5.2 Differential Effect of Banking Crises on Value-Added Growth -- Table 5.3 Differential Effects of Banking Crises on Value-Added Growth: Differences between Developed and Developing Countries -- Table 5.4 Differential Effect of Banking Crises on Value-Added: Difference Among Countries and Crises -- Table 5.5 Differential Effects of Banking Crises on Growth in Capital Formation and the Number of Establishments -- Table 5.6 Differential Effects of Banking Crises on Value-Added Growth: Industries Differentiated Based on Establishment Size -- Table 5.7 Differential Effects of Banking Crises on Value-Added Growth: Industries Differentiated Based on Export Orientation.

Table 5.8 Policy Interventions during Crises as Classified by Honohan and Klingebiel (2003) -- Table 5.9 Differential Effects of Banking Crises and Intervention Policies -- Table 5.10 External Dependence Index -- Table 5.11 Summary Statistics -- Table 5.12 Correlations Between Measures of External Dependence -- Table 5.13 Banking Crises Inception Dates -- Table 5.14 Average Growth of Real Value Added in Crisis and Noncrisis Years -- Table 6.1 Skewness, Crises, and Extreme Observations -- Table 6.2 Skewness and Growth: Baseline Estimations -- Table 6.3 Skewness and Growth: Country Grouping Estimates -- Table 6.4 Crisis Indexes and Growth -- Table 6.5 Skewness, Investment, and Growth -- Table 7.1 List of Countries in the Dataset -- Table 7.2 Pairwise Correlations of Alternative Capital Control Indices -- Table 8.1 Portfolio Equity Liabilities Reported by Destination and Investor Countries, 2004 -- Table 8.2 Portfolio Equity Liabilities Reported by Destination and Investor Countries, 2004 -- Table 8.3 Cumulative Value of Net Errors and Omissions, Selected Countries (1970-2004) -- Table 8.4 Correlation Between Current Account and Change in Net Foreign Assets: Industrial Countries and Emerging Markets, Annual Data, 1971-2004 -- Table 8.5 Standard Deviation of Current Account and Change in Net Foreign Assets, 1982-2004 -- Table 8.6 Cumulative Current Account and Change in Net Foreign Asset Position, 1982-2004 -- Table 8.7 Decomposition of Net Foreign Asset Position Dynamics, 1996-2004 -- Table 9.1 Gross and Net External Positions, 2004 -- Table 9.2 Capital Controls by Type, 1995-2005 -- Table 9.3 Determinants of Gross External Liabilities Per Capita, 2004 -- Table 9.4 Gravity Estimates for Bilateral Foreign Asset Positions, 2004 -- Table 9.5 Potential Gains from Risk Pooling Among Countries.

Table 9.6 Impact of Financial Integration on Consumption Volatility.