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Privatization And Financial Market Development In Emerging Countries: A Comparative Study

Author

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  • SAMY BEN NACEUR

    (International Monetary Fund (IMF), 700 19th Street, MW Washington, DC 20431, USA)

  • NARJESS BOUBAKRI

    (American University of Sharjah, School of Business and Management, NAB 110, Sharjah 26666, UAE;
    HEC Montréal, 3000 Côte Sainte Catherine, Montréal, Québec, Canada, H3T 2A7, Canada)

  • SAMIR GHAZOUANI

    (International Monetary Fund (IMF), 700 19th Street, MW Washington, DC 20431, USA)

Abstract

This paper examines the impact of privatization on stock market size and liquidity in a multinational sample of 31 emerging markets. We find that the intensity of privatization and the use of privatization offerings (POs) on the stock market contribute to enhance stock market development, but the documented effects vary across geographical regions, owing to the specificities of the divestiture process. We use GMM procedure in order to estimate dynamic panel specifications and find that privatization appears to be the most beneficial in the Asian sub-sample where most favorable conditions were put in place before privatization actually started. In other regions, however, similar positive outcomes are yet to materialize. We derive several policy implications from our results.

Suggested Citation

  • Samy Ben Naceur & Narjess Boubakri & Samir Ghazouani, 2010. "Privatization And Financial Market Development In Emerging Countries: A Comparative Study," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 229-250.
    • Handle: RePEc:wsi:medjxx:v:02:y:2010:i:02:n:s1793812010000241
    DOI: 10.1142/S1793812010000241
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    References listed on IDEAS

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    1. John Nellis, 2005. "Privatization in Africa: What has happened? What is to be done?," Working Papers 2005.127, Fondazione Eni Enrico Mattei.
    2. Enrico C. Perotti & Luc Laeven & Pieter van Oijen, 2000. "Confidence Building in Emerging Stock Markets," William Davidson Institute Working Papers Series 366, William Davidson Institute at the University of Michigan.
    3. Nellis, John, 2005. "Privatization in Africa: What has happened? What is to be done?," Privatisation Regulation Corporate Governance Working Papers 12200, Fondazione Eni Enrico Mattei (FEEM).
    4. Gabriella Chiesa & Giovanna Nicodano, 2003. "Privatization and Financial Market Development: Theoretical Issues," Working Papers 2003.1, Fondazione Eni Enrico Mattei.
    5. Arellano, Manuel, 2003. "Panel Data Econometrics," OUP Catalogue, Oxford University Press, number 9780199245291.
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    Keywords

    Privatization; stock market development;

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