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Domestic Capital Market Reform and Access to Global Finance: Making Markets Work

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  • Peter Blair Henry
  • Peter Lombard Lorentzen

Abstract

Contrary to the predictions of standard economic theory, capital market liberalization has been a mixed blessing for many countries. Liberalization of debt inflows exposes economies to the risk of crises stemming from sudden changes in investor sentiment. Equity market liberalizations, on the other hand, have promoted growth in almost every liberalizing country. Yet equity market liberalizations have not had as strong an effect as might be expected. To convince outsiders to invest, countries must put in place laws and supporting institutions to protect the rights of minority shareholders. Countries with such protections tend to have larger, more efficient, and more stable stock markets than those that do not.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10064.

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Date of creation: Nov 2003
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Publication status: published as Litan, Robert E., M. Pomerleano, and V. Sundararajan (eds.) The Future of Domestic Capital Markets in Developing Countries. Baltimore, MD: Brookings Institution Press, 2003.
Handle: RePEc:nbr:nberwo:10064

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Citations

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Cited by:
  1. Peter Blair Henry, 2006. "Capital account liberalization: theory, evidence, and speculation," Working Paper Series, Federal Reserve Bank of San Francisco 2007-32, Federal Reserve Bank of San Francisco.
  2. Friedman, Felice B. & Grose, Claire, 2006. "Promoting access to primary equity markets : a legal and regulatory approach," Policy Research Working Paper Series 3892, The World Bank.
  3. Kristin J. Forbes, 2007. "The Microeconomic Evidence on Capital Controls: No Free Lunch," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, pages 171-202 National Bureau of Economic Research, Inc.
  4. Laura Alfaro & Sebnem Kalemli-Ozcan, 2004. "Why doesn't capital flow from rich to poor countries? An empirical investigation," 2004 Meeting Papers, Society for Economic Dynamics 53, Society for Economic Dynamics.
  5. Filippo Brutti, 2010. "Legal enforcement, public supply of liquidity and sovereign risk," IEW - Working Papers 464, Institute for Empirical Research in Economics - University of Zurich.
  6. Henry, Peter B., 2004. "Perspective Paper on Financial Instability," Research Papers, Stanford University, Graduate School of Business 1866, Stanford University, Graduate School of Business.
  7. Laura Alfaro & Sebnem Kalemli-Ozcan & Vadym Volosovych, 2005. "Capital Flows in a Globalized World: The Role of Policies and Institutions," NBER Working Papers 11696, National Bureau of Economic Research, Inc.
  8. Peter Henry, 2007. "Capital Account Liberalization: Theory, Evidence, and Speculation," Discussion Papers, Stanford Institute for Economic Policy Research 07-004, Stanford Institute for Economic Policy Research.
  9. Serkan Arslanalp & Peter Blair Henry, 2004. "Helping the Poor to Help Themselves: Debt Relief or Aid," NBER Working Papers 10230, National Bureau of Economic Research, Inc.
  10. Bae, Kee-Hong & Goyal, Vidhan K., 2010. "Equity market liberalization and corporate governance," Journal of Corporate Finance, Elsevier, Elsevier, vol. 16(5), pages 609-621, December.
  11. Chen, Xing & Munasib, Abdul & Roy, Devesh, 2012. "Financial reforms and international trade:," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1182, International Food Policy Research Institute (IFPRI).
  12. Jo�l van der Weele, 2005. "Financing development: debt versus equity," DNB Working Papers, Netherlands Central Bank, Research Department 038, Netherlands Central Bank, Research Department.

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