بازارهای سهام در حال ظهور و توسعه اقتصادی

We provide an analysis of real economic growth prospects in emerging markets after financial liberalizations. 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. The effect is larger for countries with high education levels.

We present new evidence on the relation between financial equity market liberalizations and economic growth for a collection of emerging economies. We find that average real economic growth increases between 1% and 2% per annum after a financial liberalization. Our results are robust across a number of different economic specifications. This analysis, of course, reveals no causality. However, even after we control for a comprehensive set of macroeconomic and financial variables, our financial liberalization indicator retains significance. There is a substantial literature that tries to explain the cross-sectional determinants of economic growth. Barro (1991) and Barro and Sala-i-Martin (1995) explore the ability of a large number of macroeconomic and demographic variables to explain the cross-sectional characteristics of economic growth rates. More recent research in the growth literature has focused on the potential benefits of economic integration (the degree to which trade flows are free) and general financial development. For example, Rodrik (1999) examines the relation between openness to trade and economic growth with a standard cross-country regression methodology. With a proxy for the general openness to trade, the evidence suggests that the relation between economic growth and openness is statistically weak. Following the development of endogenous growth models where financial intermediation plays an important role, there is also an interest in determining the influence of the financial sector on the cross-section of economic growth. King and Levine (1993) focus on several measures of banking development, and find that banking sector development is an important factor in explaining the cross-sectional characteristics of economic growth. Levine and Zervos (1998) explore the degree to which both stock market and banking sector development can explain the cross-section of economic growth rates. They find evidence in support of the claim that equity market liquidity is correlated with rates of economic growth. Additionally, they argue that banking and stock market development independently influence economic growth. They also find that there is little empirical evidence to support the claim that financial integration is positively correlated with economic growth. Unlike previous work, we focus exclusively on the relation between real economic growth and financial liberalization. Our work is partially motivated by Bekaert and Harvey (2000) who examine the relation between financial liberalization and the dividend yield. While the dividend yield contains information about the cost of capital, it also houses information about growth prospects. A reduction in the cost of capital and/or an improvement in growth opportunities are the most obvious channels through which financial liberalization can increase economic growth. After finding reduced dividend yields for countries that undergo financial liberalization, Bekaert and Harvey also examine the relationship between economic growth and liberalization at very short horizons and find a positive association. Our work is also distinguished by the extensive use of time-series as well as cross-sectional information. Indeed, the advent of financial liberalization suggests a temporal dimension to the growth debate that is not captured by the standard cross-country estimation methodology. Typically, the growth literature focuses on either a purely cross-sectional analysis or a time-series dimension that is limited to at most three time-series observations per country.1 We employ a time-series cross-sectional estimation methodology using Hansen's (1982) generalized method of moments (GMM). Our estimation strategy is considerably different from the existing literature in that we exploit the information in overlapping time-series data. Given the novelty of this approach, the econometric methodology is discussed extensively. Furthermore, we conduct several Monte Carlo experiments to assess the properties of our estimation strategy in this economic environment. Levine and Renelt (1992) discuss the caution one must exercise when interpreting cross-country regressions. They demonstrate that the estimated coefficients are extremely sensitive to the conditioning variables employed. For this reason, we also consider a variety of different specifications. The paper is organized as follows. Section 2 introduces the variables we employ in our empirical work. Section 3 explains the econometric methodology, and discusses the results of a Monte Carlo analysis. Section 4 details the empirical results, and Section 5 concludes.

The goal of the paper is to explore the relation between financial liberalization and real economic growth. While considerable effort in the past has been expended on the economic and financial fundamentals that explain the cross-section of economic growth, we focus on financial liberalizations. We emphasize the time-series component of growth in addition to the cross-sectional relation. Our results suggest that financial market liberalizations are associated with higher real growth, in the range of 1% per annum. The impact of financial market liberalizations is robust to the inclusion of the usual set of control variables representing the macroeconomic environment, banking development and stock market development. In addition, the relationship between real economic growth and liberalization is not impacted if we control for the size of the government sector or examine early versus late liberalizers. We also find evidence that the impact of liberalization on growth is not a Latin American phenomena. We do find, however, that countries with a higher than average level of education, benefit much more from financial liberalization. Although our empirical results are intriguing, they warrant further analysis. First, we have focused only on emerging financial markets. In the standard cross-sectional growth literature, larger cross-sections are used including developed countries. Second, dating financial liberalization is problematic (see Bekaert et al., 1999), and we should consider further robustness checks on the financial liberalization dates we consider.6 Finally, the results remain inherently empirical. How do financial liberalizations result in higher economic growth? Bekaert and Harvey (2000) and Henry, 2000a and Henry, 2000b provide evidence that the cost of capital may have decreased and investment increased after capital market liberalization. Comparing Table 7 and Table 8 reveals that the turnover coefficient decreases when the liberalization indicator is introduced, suggesting perhaps a liquidity/efficiency mechanism for enhanced growth. Our new research, Bekaert et al. (2001), begins to carefully examine all of these important questions.