The Impact of Capital Market Players’ Exit, Voice and Loyalty on Economic Growth

Zsolt Szabó

Public Finance Quarterly, 2012, vol. 57, issue 4, 474-489

Abstract: In analyses of the global money and capital markets, economic discourse is mostly focussed on the movement and flow of capital, giving less emphasis to its role in influencing the formation of institutional frameworks as well as national and interna-tional rules, particularly in terms of the impact on economic growth. Based on the concept of exit, voice and loyalty developed by albert O. Hirschman, this paper examines the effect of capital movement and investors’ voice on economic growth, making use of both macroeconomic tools and linear regression based on the data of European countries and Post-Soviet states. Our results indi-cate that the de facto exit of capital has a negative effect on economic growth, while the de jure exit of capital to the shadow econ-omy and investors’ voice result in a higher growth rate.

Keywords: exit; voice; capital movement; credit rating; economic growth (search for similar items in EconPapers)
JEL-codes: B21 B59 D01 D03 D53 E23 E26 F21 O16 O17 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:pfq:journl:v:57:y:2012:i:4:p:474-489

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