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Financial Liberalization: The Experience of Developing Countries

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Author Info

  • Philip Arestis

    ()
    (Department of Economics, University of East London)

  • Panicos Demetriades

    ()
    (The Business School, South Bank University, London)

Abstract

This paper investigates the experience of developing countries with financial liberalization, focusing on the gap between theory and evidence. While the former suggests positive effects on economic development, the latter pinpoints to significant destabilizing consequences. e argue that the main implicit assumptions of the financial liberalization thesis, perfect information and perfect competition, along with the scant attention paid to stock markets, are responsible for this discrepancy. We conclude by suggesting that a great deal more caution should be disposed in the future when implementing financial liberalization policies.

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File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume25/V25N4P441_457.pdf
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Bibliographic Info

Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

Volume (Year): 25 (1999)
Issue (Month): 4 (Fall)
Pages: 441-457

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Handle: RePEc:eej:eeconj:v:25:y:1999:i:4:p:441-457

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Web page: http://www.ramapo.edu/eea/journal.html
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Related research

Keywords: Developing Countries; Development; Financial Liberalization;

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Citations

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Cited by:
  1. Colin Kirkpatrick, 2005. "Finance and Development: Overview and Introduction," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 631-635.
  2. Demetriades, Panicos O. & Luintel, Kul B., 2001. "Financial restraints in the South Korean miracle," Journal of Development Economics, Elsevier, vol. 64(2), pages 459-479, April.
  3. Robert Prasch, 2001. "The Economic Contributions of Robert A. Mundell," Review of Political Economy, Taylor & Francis Journals, vol. 13(1), pages 41-58.
  4. Thomas Barnebeck Andersen & Finn Tarp, 2003. "Financial liberalization, financial development and economic growth in LDCs," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(2), pages 189-209.
  5. Gregory James & Michail Karoglou, 2009. "Financial Liberalisation and Stock Market Volatility: The Case of Indonesia," Discussion Paper Series 2009_11, Department of Economics, Loughborough University, revised Sep 2009.
  6. Michail Karoglou & Panicos Demetriades & Siong Law, 2011. "One date, one break?," Empirical Economics, Springer, vol. 41(1), pages 7-24, August.
  7. James B. Ang & Warwick J. McKibbin, 2005. "Financial Liberalization, Financial Sector Development And Growth: Evidence From Malaysia," CAMA Working Papers 2005-05, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  8. Christian E. Weller & Manita Rao, 2008. "Can Progressive Taxation Contribute to Economic Development?," Working Papers wp176, Political Economy Research Institute, University of Massachusetts at Amherst.
  9. Tarron Khemraj, 2007. "What does excess bank liquidity say about the loan market in Less Developed Countries?," Working Papers 60, United Nations, Department of Economics and Social Affairs.
  10. Gehringer, Agnieszka, 2013. "Financial liberalization, financial development and productivity growth: An overview," Economics Discussion Papers 2013-46, Kiel Institute for the World Economy.
  11. Burgoon, Brian & Demetriades, Panicos & Underhill, Geoffrey R.D., 2012. "Sources and legitimacy of financial liberalization," European Journal of Political Economy, Elsevier, vol. 28(2), pages 147-161.
  12. Qazi Muhammad Adnan Hye & Shahida Wizarat, 2011. "Impact of financial liberalization on agricultural growth: a case study of Pakistan," China Agricultural Economic Review, Emerald Group Publishing, vol. 3(2), pages 191-209, May.
  13. Brian Burgoon & Panicos Demetriades & Geoffrey R D Underhill, 2008. "Financial Liberalisation and Political Variables: a response to Abiad and Mody," WEF Working Papers 0039, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
  14. repec:hal:cepnwp:hal-00188615 is not listed on IDEAS
  15. repec:hal:wpaper:hal-00188615 is not listed on IDEAS
  16. Tarron Khemraj, 2008. "Excess liquidity, oligopolistic loan markets and monetary policy in LDCs," Working Papers 64, United Nations, Department of Economics and Social Affairs.
  17. Groenewold, Nicolaas & Tang, Sam Hak Kan & Wu, Yanrui, 2003. "The efficiency of the Chinese stock market and the role of the banks," Journal of Asian Economics, Elsevier, vol. 14(4), pages 593-609, August.
  18. Dandume, Muhammad Yusuf & A.C., Dr.Malarvizhi, 2014. "Does Financial Liberalization, Spur Economic Growth and Poverty Reduction in Six Sub-Saharan African Countries; Panel Unit Root and Panel Vector Error Correction Tests," MPRA Paper 52349, University Library of Munich, Germany, revised Aug 2013.
  19. Christian Weller & Laura Singleton, 2004. "Political Freedom, External Liberalization and Financial Stability," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(1), pages 1-22.

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