The quality effect: Does financial liberalization improve the allocation of capital?
Abstract
The study documents evidence of a 'quality effect' of financial liberalization on allocative efficiency, which is measured by the dispersion in Tobin's Q across firms. Based on a simple model, the authors predict that financial liberalization, by equalizing access to credit, reduces the variation in expected marginal returns. They test this prediction using a new financial liberalization index and firm-level data for five emerging markets: India, Jordan, Korea, Malaysia, and Thailand. They find strong evidence that financial liberalization, rather than financial deepening, improves allocative efficiency.(This abstract was borrowed from another version of this item.)
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Bibliographic Info
Article provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 87 (2008)
Issue (Month): 2 (October)
Pages: 270-282
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Web page: http://www.elsevier.com/locate/devec
Related research
Keywords:Other versions of this item:
- Abdul Abiad & Nienke Oomes & Kenichi Ueda, 2004. "The Quality Effect: Does Financial Liberalization Improve the Allocation of Capital?," IMF Working Papers 04/112, International Monetary Fund.
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