Relationship Between Globalization and Financial Development: An Empirical Study on Brics-T Countries

Abstract

The aim of this research is to investigate the relationship between financial development and economic globalization, social globalization and politic globalization index in BRICS-T countries for the 1990-2014 period. In the research two different development indicators -banking development and stock market development- were used. Augmented Mean Group (AMG) and Common Correlated Effects Mean Group (CCEMG) were used as the estimators in the research. Also, causality test which was developed by Dumitrescu and Hurlin (2012) was used in the research. As a result of the analyses, it was determined that globalization had an impact on the financial development levels of BRICS-T countries. In addition, while causality relationship was determined from GDP to financial development indicators, causality relationship from financial indicators to GDP couldn’t be determined. Also, two-way causality was determined between politic globalization and financial development indicators. One-way causality relationship was determined from economic globalization and politic globalization to financial development indicators. The results of the research are important in terms of examining the effects of globalization on financial markets and explaining how the financial development levels of countries are affected by globalization. In this context, it contributes to politicians and policy makers in terms of creating globalization policies.

Keywords

• globalization
• kof index
• financial development
• banking
• stock market
• brics-t
• kof endeksi
• küreselleşme
• finansal gelişme
• bankacılık
• borsa
• brics-t