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Financial Liberalization Index for Nepal

Author

Listed:
  • Shrestha, M.B.
  • Chowdhury, k.

Abstract

A financial liberalization index (FLI) for Nepal is constructed in order to show the degree or the level of financial liberalization at a particular time. FLI is calculated on the basis of principal components method following Demetriades and Luintel (1997), Bandiera, Caprio et al. (2000), Laeven (2003), and Laurenceson and Chai (2003). The index comprises eight policy components, viz, (1) interest rate deregulation (IRD), (2) removal of entry barriers (REB), (3) reduction in reserve requirement (RRR), (4) easing in credit control (ECC), (5) implementation of prudential rules (IPR), (6) stock market reform (SMR), (7) privatization of state-owned banks (PSB), and (8) external account liberalization (EAL). As some of these policy measures have been implemented in phases, the index is designed to take into account their partial and gradual implementation too.

Suggested Citation

  • Shrestha, M.B. & Chowdhury, k., 2006. "Financial Liberalization Index for Nepal," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 3(1), pages 41-54.
    • Handle: RePEc:eaa:ijaeqs:v:3:y2006:i:1_3
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    File URL: http://www.usc.es/economet/reviews/ijaeqs313.pdf
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    Citations

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    Cited by:

    1. Birendra Bahadur Budha, 2013. "Demand for Money in Nepal: An ARDL Bounds Testing Approach," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 25(1), pages 21-36, April.
    2. Min Bahadur Shrestha, Ph.D., 2006. "Testing for Unit Roots in Nepalese Macroeconomic Data," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 18, pages 1-19, April.
    3. Oludele Emmanuel Folarin, 2019. "Financial reforms and industrialisation: evidence from Nigeria," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 21(1), pages 166-189, June.
    4. Bishnu Prasad Gautam, Ph.D., 2015. "Role of Financial Development in Economic Growth of Nepal: An Empirical Analysis," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 27(1), pages 1-16, April.
    5. repec:jle:journl:167 is not listed on IDEAS
    6. Min B. SHRESTHA & Khorshed CHOWDHURY, 2007. "Impact of Financial Liberalization on Welfare: Evidence from Nepal," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(1).
    7. Bouzid AMAIRA, 2016. "Financial liberalization and economic growth: Evidence from Tunisia," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 243-262, Winter.
    8. Birendra Bahadur Budha, 2013. "Demand for Money in Nepal: An ARDL Bounds Testing Approach," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 25(1), pages 21-36, April.
    9. Tweneboah Senzu, Emmanuel & Ndebugri, Haruna, 2018. "The economic evidence in the relationship between corporate tax and private investment in Ghana," MPRA Paper 84729, University Library of Munich, Germany.
    10. Jagadish Prasad Bist & Nar Bahadur Bista, 2018. "Finance–Growth Nexus in Nepal: An Application of the ARDL Approach in the Presence of Structural Breaks," Vikalpa: The Journal for Decision Makers, , vol. 43(4), pages 236-249, December.
    11. 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 Limited, vol. 3(2), pages 191-209, May.
    12. Bishnu Prasad Gautam Ph.D., 2014. "Financial Development and Economic Growth in Nepal," NRB Working Paper 25/2014, Nepal Rastra Bank, Research Department.
    13. Sulaiman, Saidu & Masih, Mansur, 2017. "Is liberalizing finance the game in town for Nigeria ?," MPRA Paper 95569, University Library of Munich, Germany.
    14. Babajide Fowowe, 2011. "Financial Sector Reforms And Private Investment In Sub-Saharan African Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(3), pages 79-97, September.
    15. Ramesh Chandra Paudel & Kankesu Jayanthakumaran, 2009. "Financial Liberalization and Performance in Sri Lanka," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 10(1), pages 127-156, January.
    16. Muhammad Idrees & Umar Hayat & Magdalena Radulescu & Md Shabbir Alam & Abdul Rehman & Mirela Panait, 2022. "Measuring the Financial Liberalization Index for Pakistan," JRFM, MDPI, vol. 15(2), pages 1-25, January.
    17. Erasmus L. Owusu & Nicholas M. Odhiambo, 2015. "Financial Sector Reforms and Economic Growth in Ghana: a Dynamic ARDL Model," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 9(2), June.
    18. Bouzid AMAIRA, 2016. "Financial liberalization and economic growth: Evidence from Tunisia," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 243-262, Winter.
    19. Birendra Bahadur Budha, 2012. "A Panel Data Analysis of Foreign Trade Determinants of Nepal: Gravity Model Approach," NRB Working Paper 12/2012, Nepal Rastra Bank, Research Department.
    20. Bhatta, Guna Raj & Nepal, Rabindra & Harvie, Charles & Jayanthakumaran, Kankesu, 2022. "Testing for the uncovered interest parity condition in a small open economy: A state space modelling approach," Journal of Asian Economics, Elsevier, vol. 82(C).

    More about this item

    Keywords

    Financial Liberalization; Welfare; Employment; Income Distribution; South Asia; Nepal;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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