Emerging Equity Markets and Economic DevelopmentWe provide an analysis of real economic growth prospects in emerging markets after financial liberalizations. In contrast with previous research, we identify the financial liberalization dates and examine the influence of liberalizations while controlling for a number of other macroeconomic and financial variables. Our work also introduces an econometric methodology that allows us to use extensive time-series as well as cross-sectional information for our tests. We find across a number of different specifications that financial liberalizations are associated with significant increases in real economic growth. |
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Bank Development Indicators banking sector development Bekaert and Harvey capita GDP growth conditional convergence countries from 1980 Development Indicators CD-ROM divided by GDP econometric methodology economic growth rates Emerging Equity Markets equity market error estimated coefficient evidence presented explain the cross-sectional financial liberalization financial market financial variables GMM weighting matrix Govt/GDP gross domestic product growth literature hand side variables heteroskedasticity Inflation initial GDP Jarque-Bera Probability k=1 Weighting matrix King and Levine Kurtosis Levine and Zervos liberalization and economic Log(GDP macroeconomic market capitalization market liquidity MCAP/GDP measure of banking Monte Carlo NBER Working Papers number of domestic Official Liberalization Indicator Priv Credit/GDP real economic growth real per capita regressions relation between financial relationship residuals sample secondary school enrollment Sri Lanka stock market stock market development Summary statistics time-series TRADE/GDP Turnover variables and economic variance-covariance matrix Weighting matrix II weighting matrix specifications World Bank World Bank Development xi,t