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Can Openness Hypothesis Improve Political Economy of Pakistans Financial Market?

Jawad Ahmad, Sania Zehraa and Noor Jehan
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Jawad Ahmad: Research Associate, University of Kassel, Hessen, Germany.
Sania Zehraa: Research Scholar, International Islamic University, Islamabad, Pakistan.
Noor Jehan: Assistant Professor,Department of Economics,Abdul Wali Khan University, Mardan, KP, Pakistan.

Global Political Review, 2018, vol. 3, issue 1, 56-65

Abstract: This paper is an attempt to test the openness hypothesis for the case of Pakistan. Being a developing country and having different interest groups interfering in the financial market, openness hypothesis provides a theory that provides a win-win situation for the interest groups, consequently improving financial development. We presented a political economy approach of analyzing the state of Pakistans financial market and proposed an openness hypothesis. Our result indicates that individually, trade and financial opening are beneficial for improving the financial market development however, the simultaneous opening of financial and trade hypothesis does not hold for Pakistan. In other words, the simultaneous opening of financial and trade accounts does not seem to be a necessary condition for improving the financial sector.

Keywords: Financial Development; Openness hypothesis; Political economy; Regression analysis; Financial Liberalization; Trade openness. (search for similar items in EconPapers)
JEL-codes: R00 Z0 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:aaw:gprjrn:v:3:y:2018:i:1:p:56-65

DOI: 10.31703/gpr.2018(III-I).06

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