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

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  • Kaya, Ilker
  • Lyubimov, Konstantin
  • Miletkov, Mihail

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.

Suggested Citation

  • Kaya, Ilker & Lyubimov, Konstantin & Miletkov, Mihail, 2012. "To liberalize or not to liberalize: Political and economic determinants of financial liberalization," Emerging Markets Review, Elsevier, vol. 13(1), pages 78-99.
    • Handle: RePEc:eee:ememar:v:13:y:2012:i:1:p:78-99
    DOI: 10.1016/j.ememar.2011.10.002
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    Cited by:

    1. Jun Wen & Umar Farooq & Suhaib Anagreh & Mosab I. Tabash, 2022. "Quality of governance and corporate real investment: Assessing the impact of foreign aid," Bulletin of Economic Research, Wiley Blackwell, vol. 74(4), pages 1115-1134, October.
    2. Acquaah, Moses, 2015. "Determinants of corporate listings on stock markets in Sub-Saharan Africa: Evidence from Ghana," Emerging Markets Review, Elsevier, vol. 22(C), pages 154-175.
    3. Brahim Gaies & Stéphane Goutte & Khaled Guesmi, 2019. "Does Financial Globalization Still Spur Growth In Emerging And Developing Countries? Considering Exchange Rate Volatility'S Effects," Working Papers hal-01968082, HAL.

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    More about this item

    Keywords

    Equity market liberalization; Foreign investors; Government policy and regulation; Foreign financial aid;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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