تئوری گروه های ذی نفع توسعه مالی: شواهدی از قوانین و مقررات

We use a new dataset of de jure measures of trade, capital account, product market, and domestic financial regulation for 91 countries from 1973 to 2005 to test Rajan and Zingales’s (2003) interest group theory of financial development. In line with the theory, we find strong evidence that trade liberalization is a leading indicator of domestic financial liberalization. This result is robust to the use of different data frequencies (annual, 5-year intervals), estimation methods (OLS, 2SLS, system GMM) and a check for non-linear effects. However, in contrast to the theory, we do not find consistent evidence of an effect of capital account liberalization.

The role of economic openness in financial development has received particular attention since the contribution by Rajan and Zingales (2003). Their “interest group theory” stresses the role of trade and financial openness in reducing the influence of interest groups that oppose financial development. In a closed economy, incumbents benefit from financial repression and the resulting low financial development because it denies potential competitors the financial resources to enter the market. Increasing both trade and capital account openness undermines this status quo. Foreign entry in the domestic goods markets reduces rents and creates more investment needs for incumbents to counter competition and take advantage of new opportunities. 1 At the same time, opening up capital flows renders financial repression increasingly impossible to implement. Studies have tested the effect of trade and financial openness on the liberalization and development of the financial sector from various angles.

We have provided a new test of the interest group theory of financial development based on regulation. Moreover, we have suggested and tested an extension to the theory in that product market liberalization may have similar effects on financial liberalization as stipulated for trade by Rajan and Zingales (2003) by shifting the relative costs and benefits of financial liberalization for incumbents. In doing so, we have for the first time examined the sequencing of trade, product market, capital account, and domestic financial liberalization for an encompassing country panel. Our findings support the primacy of trade implied by Rajan and Zingales’s (2003) interest group theory: trade liberalization is a significant leading indicator of domestic financial liberalization. However, we do not find evidence in favor of the view that capital account liberalization—or its interaction with trade—are a leading indicator of domestic financial liberalization. Our additional new result that product market liberalization is a leading indicator of domestic financial reform is consistent with Rajan and Zingales’s view that the opposition of interest groups to domestic financial liberalization weakens as product markets become more competitive.