The trade-off between liberalisation policy and financial crises dynamics
Abstract
In this paper, we attempt to check the extent to which a quick and a rushed liberalisation process is a determining and an explanatory factor of financial crises. With reference to the state space model and Kalman filter technique, we were able to elaborate a new measure of financial openness for the South East Asian countries. This measure is first used to raise the financial openness pace already ill-adapted by these countries during the 1997 crisis. Second, we created a measure of financial instability during the (1990-2008) period. The results led us to the conclusion that a rapid liberalisation process may be a crises-provoking factor. Ten years later, the international financial sector has been hit by a major financial crisis. Some southern Mediterranean countries have been relatively spared the ordeal. Applying these measures on the Tunisia context period, we reached the conclusion that a moderately-paced liberalisation process is a way of avoiding devastating financial situations. 
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