TY  - JOUR
AU  - Bekaert,Geert
AU  - Harvey,Campbell R.
AU  - Lundblad,Christian
TI  - Does Financial Liberalization Spur Growth?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8245
PY  - 2001
Y2  - April 2001
UR  - http://www.nber.org/papers/w8245
L1  - http://www.nber.org/papers/w8245.pdf
N1  - Author contact info:
Geert Bekaert
Graduate School of Business
Columbia University
3022 Broadway, 411 Uris Hall
New York, NY 10027
Tel: 212/854-9156
Fax: 212/662-8474
E-Mail: gb241@columbia.edu

Campbell R. Harvey
Duke University
Fuqua School of Business
Durham, NC 27708-0120
Tel: 919/660-7768
Fax: 919/660-8030
E-Mail: cam.harvey@duke.edu

Christian Lundblad
Department of Finance
University of North Carolina at Chapel Hill
Chapel Hill, NC  27599-3490
Tel: 919-962-8441
Fax: 707-371-7060
E-Mail: Christian_Lundblad@unc.edu
AB  - We show that equity market liberalizations, on average, lead to a one percent increase in annual real economic growth over a five-year period. The liberalization effect is not spuriously accounted for by macro-economic reforms and does not reflect a business cycle effect. Although financial liberalizations further financial development, measures of financial development fail to fully drive out the liberalization effect.  The investment/GDP ratio increases post liberalization, with the investment partially financed by foreign capital inducing worsened trade balances. Differentiating across liberalizing countries, a large secondary school enrollment, a small government sector and an Anglo-Saxon legal system tend to enhance the liberalization effect. Finally, the conditional convergence effect is larger once financial liberalization is accounted for.
ER  -