Abstract:

Purpose: The purpose of this study is to test how much the financial system is at the root of the current account deficit in the "Fragile Five" countries. Design/Methodology: Whether the development and liberalization of the financial system increases the current account deficit in the "fragile five" countries is tested by panel data analysis techniques. Findings: Test results show that there is a mutual causality relationship between current account deficit and financial development in the long run. Limitations: In this study, the relationship between current account deficit and financial development in Brazil, India, Indonesia, South Africa and Turkey, which are called "fragile five" countries, is examined. Originality/Value: In the economics literature, the current account deficit problem, whose determinants have been studied a lot, became important for five countries in the category of developing countries after 2013, and these countries were nicknamed "The Fragile Five". These countries are Brazil, India, Indonesia, South Africa and Turkey. These economies were adversely affected by capital outflows in the post-2013 period, as well as current account imbalances in the post-global financial crisis period.

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