To liberalize or not to liberalize: Political and economic determinants of financial liberalization

Ilker Kaya, Konstantin Lyubimov and Mihail Miletkov

Emerging Markets Review, 2012, vol. 13, issue 1, 78-99

Abstract: Using a sample of 70 emerging market and developing countries, we examine the political and economic factors which affect the government's decision to liberalize the domestic equity markets. We document that the levels of industrialization and financial development, the quality of investor protection, and the level of the government's involvement in the economy are closely associated with the stock market liberalization decision. Furthermore, we find a positive and significant relation between the amount of foreign financial aid received by the governments in emerging market countries and the probability of stock market liberalization.

Keywords: Equity market liberalization; Foreign investors; Government policy and regulation; Foreign financial aid (search for similar items in EconPapers)
JEL-codes: F30 F35 G15 G18 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:13:y:2012:i:1:p:78-99

DOI: 10.1016/j.ememar.2011.10.002

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