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Financial Liberalization and Stock Market Efficiency

Author

Listed:
  • Maria-Lenuta ULICI
  • Ioan Alin NISTOR

    (“Babes-Bolyai” University, Cluj Napoca)

Abstract

Stock market liberalization may have a favorable impact on the economy in many aspects. Many empirical studies have shown that liberalization had a positive effect on developing economies, resulting in diminishing the impact of the cost of capital, the increasing of returns and individuals investment. However, liberalization can make a country to be sensitive to some economic and foreign policy turbulence, leading, ultimately, to a higher volatility of domestic markets. In this article we intend to analyze the effect of emerging stock market liberalization on weak form efficiency hypothesis. Following the implementation of the liberalization process, we found that the analyzed emerging markets (Hungary, Poland, Czech Republic, Slovenia, Slovakia and Romania) are weak form efficiency markets (except the Slovak stock market, it was efficient before liberalization).

Suggested Citation

  • Maria-Lenuta ULICI & Ioan Alin NISTOR, 2011. "Financial Liberalization and Stock Market Efficiency," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(13), pages 154-160, December.
    • Handle: RePEc:aio:fpvfcf:v:1:y:2011:i:13:p:154-160
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    Citations

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    Cited by:

    1. Mynhardt, H. R. & Plastun, Alex & Makarenko, Inna, 2014. "Behavior of Financial Markets Efficiency During the Financial Market Crisis: 2007-2009," MPRA Paper 58942, University Library of Munich, Germany.

    More about this item

    Keywords

    financial liberalization; stock market efficiency; costs of capital; emerging markets;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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