Domestic Capital Market Reform and Access to Global Finance: Making Markets Work

46 Pages Posted: 6 Nov 2003 Last revised: 3 Jul 2022

See all articles by Peter Blair Henry

Peter Blair Henry

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER); NYU Stern Department of Finance

Peter L. Lorentzen

University of San Francisco

Date Written: November 2003

Abstract

Contrary to the predictions of standard economic theory, capital market liberalization has been a mixed blessing for many countries. Liberalization of debt inflows exposes economies to the risk of crises stemming from sudden changes in investor sentiment. Equity market liberalizations, on the other hand, have promoted growth in almost every liberalizing country. Yet equity market liberalizations have not had as strong an effect as might be expected. To convince outsiders to invest, countries must put in place laws and supporting institutions to protect the rights of minority shareholders. Countries with such protections tend to have larger, more efficient, and more stable stock markets than those that do not.

Suggested Citation

Henry, Peter Blair and Lorentzen, Peter L., Domestic Capital Market Reform and Access to Global Finance: Making Markets Work (November 2003). NBER Working Paper No. w10064, Available at SSRN: https://ssrn.com/abstract=463431

Peter Blair Henry (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

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National Bureau of Economic Research (NBER)

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Peter L. Lorentzen

University of San Francisco ( email )

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San Francisco, CA 94117-1080
United States

HOME PAGE: http://www.peterlorentzen.com

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