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A castle built on sand: The effects of mass privatization on stock market creation in transition economies

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  • Fungacova, Zuzana

    ()
    (BOFIT)

  • Hanousek, Jan

    (BOFIT)

Abstract

This paper deals with the relationship between mass privatization and stock market development in transition economies. The link is investigated empirically using a panel of data that includes most transition countries. Our results confirm the hypothesis that mass privatization exerted a negative influence on stock market functioning over the short and medium term. Further, it appears that stock markets in countries with mass privatization were initially perceived as mere byproducts of the privatization process. Such stock markets typically not only failed in their core mission of providing capital for the corporate sector, but generated negative investor sentiment and did little to catalyze economic growth.

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File URL: http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/dp1406.pdf
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Bibliographic Info

Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 14/2006.

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Length: 31 pages
Date of creation: 26 Oct 2006
Date of revision:
Handle: RePEc:hhs:bofitp:2006_014

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Postal: Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland
Phone: + 358 10 831 2268
Fax: + 358 10 831 2294
Email:
Web page: http://www.suomenpankki.fi/bofit_en/
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Related research

Keywords: privatization; mass privatization; emerging stock markets; stock market;

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References

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  1. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  2. Bonin, John & Wachtel, Paul, 2002. "Financial sector development in transition economies: Lessons from the first decade," BOFIT Discussion Papers 9/2002, Bank of Finland, Institute for Economies in Transition.
  3. John Bennett & Saul Estrin & James Maw & Giovanni Urga, 2004. "Privatisation Methods and Economic Growth in Transition Economies," Working Papers 2004.105, Fondazione Eni Enrico Mattei.
  4. Ross Levine & Sara Zervos, . "Stock markets, banks and economic growth ," CERF Discussion Paper Series 95-11, Economics and Finance Section, School of Social Sciences, Brunel University.
  5. Jan Hanousek & Evžen Ko?enda & Jan Svejnar, 2004. "Ownership, Control and Corporate Performance After Large-Scale Privatization," William Davidson Institute Working Papers Series 2004-652, William Davidson Institute at the University of Michigan.
  6. Berglöf, Erik & Bolton, Patrick, 2003. "The Great Divide and Beyond - Financial Architecture in Transition," CEPR Discussion Papers 3476, C.E.P.R. Discussion Papers.
  7. Djankov, Simeon & Murrell, Peter, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," CEPR Discussion Papers 3319, C.E.P.R. Discussion Papers.
  8. Nandini Gupta & John C. Ham & Jan Svejnar, 2000. "Priorities and Sequencing in Privatization: Theory and Evidence from the Czech Republic," William Davidson Institute Working Papers Series 323, William Davidson Institute at the University of Michigan.
  9. Beck, T.H.L. & Levine, R., 2004. "Stock markets, banks and growth: Panel evidence," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125506, Tilburg University.
  10. Lubomír Lízal & Jan Svejnar, 2002. "Investment, Credit Rationing, And The Soft Budget Constraint: Evidence From Czech Panel Data," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 353-370, May.
  11. Nancy L. Wagner & Dora M. Iakova, 2001. "Financial Sector Evolution in the Central European Economies," IMF Working Papers 01/141, International Monetary Fund.
  12. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  13. Asli Demirgüç-Kunt & Vojislav Maksimovic, 1998. "Law, Finance, and Firm Growth," Journal of Finance, American Finance Association, vol. 53(6), pages 2107-2137, December.
  14. Clifford Zinnes & Yair Eilat & Jeffrey Sachs, 2001. "The Gains from Privatization in Transition Economies: Is "Change of Ownership" Enough?," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 7.
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