To Liberalize or Not to Liberalize: Political and Economic Factors Affecting the Government’s Decision to Liberalize the Domestic Equity Markets
Mihail K. Miletkov
University of New Hampshire - Whittemore School of Business and Economics
affiliation not provided to SSRN
American University of Sharjah - School of Business and Management; University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics
March 18, 2009
The paper investigates the political and economic factors which affect the government’s decision to allow foreign investors to purchase domestic equity securities. 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. Additionally, the amount of foreign financial aid received by the governments in the emerging market countries is significantly and positively related to the probability of a stock market liberalization. The latter result contributes to the debate about the effectiveness of foreign aid by illustrating that foreign financial aid may indirectly affect economic growth through its influence on the government’s decision to liberalize the national equity markets.
Number of Pages in PDF File: 49
Keywords: Equity Market Liberalization, Foreign Financial Aid, Foreign Investors, Government Policy and Regulation
JEL Classification: F30, F35, G15, G18working papers series
Date posted: March 22, 2009 ; Last revised: October 31, 2011
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