Policy Contagion: What Do We Learn From Financial Reforms?

We use financial reforms as a case study to understand the temporal clustering of policy changes across countries, shedding light on the broader phenomenon of global policy contagion. We construct a comprehensive database of domestic financial reforms spanning 90 countries from 1973 to 2014. Using this dataset, we estimate a semistructural model that incorporates key factors identified in the literature. We find that (1) geopolitical influence and cross‐country learning drove the global surge in reforms during the 1990s, and (2) reversals of financial reforms in developing countries after the global financial crisis reflected shifting beliefs about their growth effects.