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To liberalize or not to liberalize: Political and economic determinants of financial liberalization

  • Kaya, Ilker
  • Lyubimov, Konstantin
  • Miletkov, Mihail

Using a sample of 70 emerging market and developing countries, we examine the political and economic factors which affect the government's decision to liberalize the domestic equity markets. We document that the levels of industrialization and financial development, the quality of investor protection, and the level of the government's involvement in the economy are closely associated with the stock market liberalization decision. Furthermore, we find a positive and significant relation between the amount of foreign financial aid received by the governments in emerging market countries and the probability of stock market liberalization.

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File URL: http://www.sciencedirect.com/science/article/pii/S1566014111000641
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Article provided by Elsevier in its journal Emerging Markets Review.

Volume (Year): 13 (2012)
Issue (Month): 1 ()
Pages: 78-99

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Handle: RePEc:eee:ememar:v:13:y:2012:i:1:p:78-99
DOI: 10.1016/j.ememar.2011.10.002
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620356

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