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- Banking granular residual: To compute the banking granular residual as described in the text, we use bank-level data on total net credits and total assets from the Bankscope database for the period 1995-2009. Capital controls: We use the Chinn-Ito Index as a de jure measure for financial openness.
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- Baum, C. and Schaffer (2012). IVREG2H: Stata module to perform instrumental variables estimation using heteroskedasticity-based instruments.Statistical Software Components, Boston College, Department of Economics.
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- Beck, T., Degryse, H., and S. Kneer (2013). Is more finance better? Disentangling intermediation and size effects of financial systems. Journal of Financial Stability, forthcoming.
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Bick, A. (2010). Threshold Effects of Inflation on Growth in Developing Countries, Economics Letters 108(2): 126-129.
Blank, S., C.M. Buch, and K. Neugebauer (2009). Shocks at large banks and banking sector distress: The Banking Granular Residual. Journal of Financial Stability 5(4): 353-373.
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Bremus, F., C.M. Buch, K.N. Russ, and M. Schnitzer (2013). Big Banks and Macroeconomic Outcomes: Theory and Cross-Country Evidenceof Granularity, NBER Working Paper No. 19093, Cambridge, MA.
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Claessens, S. and N. van Horen (2013). Foreign banks: Trends and Impact. Journal of Money, Credit, and Banking, forthcoming.
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- GDP growth, GDP per capita : in constant 2000 US-Dollars, WDI. Government expenditure (in % of GDP): Final consumption expenditure of the central government as a share of GDP, WDI.
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Hansen, B.E. (1999). Threshold effects in non-dynamic panels: estimation, testing, and inference. Journal of Econometrics 93, 345–368.
Hansen, B.E. (2000). Sample Splitting and Threshold Estimation, Econometrica 68(3): 575-603.
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Huizinga, H. and D. Zhu (2006). Financial Structure and Macroeconomic Volatility: Theory and Evidence. CEPR Discussion Paper 5697. London.
- Inflation: US annual CPI –inflation (2005=100), WDI. Inflow/outflow controls on financial credit: Indexes on inflow and outflow restrictions on commercial credit have been provided by Michael Klein. The measures are based on the Annual Report of Exchange Arrangements and Exchange Restrictions from the IMF and take on a value of zero if there are no restrictions on financial credit in place. A value of one reflects restrictions. We rescale this variable such that it can be interpreted in line with the other openness measures. That is, a value of zero means that restrictions are in place and hence financial openness is low, while a value of one means that no such restrictions are in place and hence financial openness is higher. Schooling: Gross secondary school enrolment rate, WDI.
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Klein, M. (2012). Capital Controls: Gates versus Walls, NBER Working Paper No. 18526, Cambridge, MA.
Klein, M., and G. Olivei (2008), Capital Account Liberalization, Financial Depth, and Economic Growth. Journal of International Money and Finance 27(6): 861-75.
Kose, M.A., E.S. Prasad, and A.D. Taylor (2011). Threshold Effects in the Process of International Financial Integration. Journal of International Money and Finance 30(1):147-179.
Kose, M.A., E.S. Prasad, and M.E. Terrones (2003). Financial Integration and Macroeconomic Volatility. IMF Working Paper 03/50. Washington D.C. Kose, M.A., E. Prasad, K. Rogoff, and S.-J. Wei (2009). Financial Globalization: A Reappraisal. IMF Staff Papers 56(1): 8-62.
Kremer, S., Bick, A. and D. Nautz (2013). Inflation and growth: new evidence from a dynamic panel threshold analysis. Empirical Economics 44(2), 861-878, April.
Lane, P.R., and G.M. Milesi-Ferretti (2007). The External Wealth of Nations Mark II. Journal of International Economics 73: 223-250.
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- Share of foreign banks: We compute the number of foreign banks relative to all banks in a given country and year from data provided by Claessens and van Horen (2013).
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Taylor, A. M. (2012). The Great Leveraging. NBER Working Paper No. 18290, Cambridge, MA. Data Appendix List of countries: Algeria, Argentina, Australia, Austria, Bangladesh, Belgium, Benin, Bolivia, Brazil, Bulgaria, Cameroon, Canada, China, Colombia, Costa Rica, Croatia, Czech Republic, Denmark, Dominican Republic, Egypt, El Salvador, Estonia, Finland, France, Georgia, Germany, Ghana, Greece, Guatemala, Honduras, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kenya, Korea, Rep., Kuwait, Latvia, Lithuania, Malawi, Malaysia, Mali, Mauritius, Mexico, Mozambique, Nepal, Netherlands, Nicaragua, Norway, Pakistan, Panama, Paraguay, Peru, Philippines, Poland, Portugal, Romania, Russia, Rwanda, Senegal, Slovak Republic, Slovenia, South Africa, Spain, Sudan, Sweden, Switzerland, Thailand, Tunisia, Turkey, Uganda, United Kingdom, United States, Uruguay, Venezuela, Zimbabwe.
- This variable measures a country’s degree of capital account openness and is available for the period 1970-2010 and 182 countries. It ranges from-1.82 to 2.46 with a sample mean of zero. The smaller the Chinn-Ito Index, the lower (de jure) financial openness. Credit to GDP: Domestic credit provided by the banking sector (in % of GDP) is taken from the WDI. Foreign bank loans: Sum of foreign bank loans (assets and liabilities) relative to GDP, International Investment Positions, IFS.
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- Total foreign assets and liabilities: We use data on total foreign assets and liabilities in US-Dollars from the database by Lane and Milesi-Feretti (2007) which is available for the period 1970-2007 for 178 countries. We extend the time series for the year 2008 and 2009 using corresponding data from the International Financial Statistics by the IMF. We deflate the data using the US-Consumer Price Index (2005=100) from the World Development Indicators. Trade share: Sum of exports and imports relative to GDP, WDI.
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