Stock Market Liberalizations: Financial and Macroeconomic Implications

Author/Editor:

Norbert Funke ; Nicola Fuchs-Schündeln

Publication Date:

December 1, 2001

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Using a panel of 27 countries, we analyze the effects of stock market liberalization on financial and macroeconomic development. We find that liberalization is associated with a short-term increase in real private investment growth of about 14 percentage points cumulatively in the four years following liberalization and a cumulative 4 percentage point increase in real GDP per capita growth. Growth tends to be higher if institutional reforms precede liberalization. In contrast to other studies, we also find evidence for a permanent growth effect of about 0.4 percent a year in an extended sample of 72 countries.

Series:

Working Paper No. 2001/193

Subject:

Credit ratings Financial markets Financial sector development Market capitalization Money National accounts Private investment Stock markets

English

Publication Date:

December 1, 2001

ISBN/ISSN:

9781451859812/1018-5941

Stock No:

WPIEA1932001

Pages:

40

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