EconPapers    
Economics at your fingertips  
 

Welfare and Distributional Impacts of Financial Liberalization in an Open Economy: Lessons from a Multi-Sectoral Dynamic CGE Model for Nepal

Keshab Bhattarai ()

International Business Research, 2017, vol. 10, issue 1, 181-198

Abstract: By equalizing rates of return across sectors, financial liberalization improves efficiency and equalizes the distribution of income. Efficiency gained in the allocation of resources increases capital usage more in previously heavily repressed sectors such as agriculture and textile, allowing up to a 19 percent expansion in production and employment. The savings and investment responses, degree of factor substitutions, are higher in the complete liberalization than in partial or piecemeal liberalization. Income, consumption, utility and overall welfare of rural and urban households increase. Liberalization is not effective if savings are used in accumulations of unproductive assets i.e. gold, jewellery, urban land, and foreign exchange. Financial liberalization improves the distribution of income by raising the wage rate of rural labor than for urban labor as rural labour-intensive sectors invest more with increased access to financial institutions and demand more labor to complement additional capital employed in these sectors.

Keywords: financial intermediation; development; dynamic CGE model; Nepal; growth; redistribution (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://www.ccsenet.org/journal/index.php/ibr/article/view/65297/35302 (application/pdf)
http://www.ccsenet.org/journal/index.php/ibr/article/view/65297 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ibn:ibrjnl:v:10:y:2017:i:1:p:181-198

Access Statistics for this article

More articles in International Business Research from Canadian Center of Science and Education Contact information at EDIRC.
Bibliographic data for series maintained by Canadian Center of Science and Education ().

 
Page updated 2022-08-08
Handle: RePEc:ibn:ibrjnl:v:10:y:2017:i:1:p:181-198