Stock Market Liberalizations: Financial and Macroeconomic Implications
December 1, 2001
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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.
Subject: Credit ratings, Financial markets, Financial sector development, Market capitalization, Money, National accounts, Private investment, Stock markets
Keywords: Africa, Asia and Pacific, capital account liberalization, Credit ratings, dependent variable, financial liberalization, Financial sector development, growth effect, liberalization coefficient, liberalization dummy, liberalization effect, Market capitalization, Private investment, regulation, stock market liberalization, Stock markets, trade liberalization, WP
Pages:
40
Volume:
2001
DOI:
Issue:
193
Series:
Working Paper No. 2001/193
Stock No:
WPIEA1932001
ISBN:
9781451859812
ISSN:
1018-5941
