Stock Market Liberalizations: Financial and Macroeconomic Implications

Norbert Funke and Nicola Fuchs-Schündeln

No 2001/193, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; stock market liberalization; liberalization effect; liberalization coefficient; liberalization dummy; capital account liberalization; dependent variable; trade liberalization; Stock markets; financial liberalization; regulation; growth effect; Private investment; Market capitalization; Financial sector development; Credit ratings; Asia and Pacific; Africa (search for similar items in EconPapers)
Pages: 40
Date: 2001-12-01
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Citations: View citations in EconPapers (13)

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