Financial Liberalization and Allocative Efficiency of Capital
Financial liberalization may have a positive effect on growth not only through the increase in the quantity of the available funds, but also through a more efficient allocation of resources across firms and sectors. Despite this intuitive appeal, t...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110530053946 http://hdl.handle.net/10986/3433 |
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okr-10986-3433 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCOUNTING AGENCY PROBLEM ALLOCATION OF CAPITAL ALLOCATION OF CREDIT ASSET PRICE ASYMMETRIC INFORMATION BANK CREDIT BANK ENTRY BANK LENDING BANKING CRISES BANKING CRISIS BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SECTORS BANKING SYSTEM BARRIER BARRIER TO ENTRY BEHAVIOR OF PRICES BORROWING COSTS BUSINESS CYCLE BUSINESS ENVIRONMENT BUSINESS REGULATION CAPITAL ACCOUNT CAPITAL ACCOUNT LIBERALIZATION CAPITAL ACCOUNT LIBERALIZATIONS CAPITAL ACCOUNT OPENNESS CAPITAL ALLOCATION CAPITAL CONTROLS CAPITAL GOODS CAPITAL INTENSITY CAPITAL MARKET CAPITAL MARKET LIBERALIZATION CENTRAL BANKS CHECKS COMMODITY COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES COMPETITIVENESS CONTRACT ENFORCEMENT CORPORATE GOVERNANCE COST OF CAPITAL CREDIT AVAILABILITY CREDIT MARKET CURRENCY CURRENCY CRISES CURRENCY CRISIS DATA AVAILABILITY DEPENDENT VARIABLE DEPENDENT VARIABLES DEPOSIT DEREGULATION DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DOMESTIC BANK DOMESTIC BANKING DOMESTIC BANKING SECTOR DOMESTIC CREDIT DOMESTIC CURRENCY DOMESTIC EQUITIES DOMESTIC EQUITY DOMESTIC SECURITIES DOMESTIC STOCK DOMESTIC STOCK MARKET DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC REFORM ECONOMIC RESEARCH EMERGING MARKET EMERGING MARKET EQUITY ENTRY BARRIERS EQUITY MARKET EQUITY MARKETS EQUITY PRICES ESTIMATION STRATEGY EXPLANATORY VARIABLES EXPORT GROWTH EXPORT MARKET EXPORT MARKETS EXPORT PERFORMANCE EXPORT SHARE EXPORT VOLUME EXPORTER EXPORTERS EXPORTS EXPOSURE EXTERNAL ASSETS EXTERNAL FINANCE FACTORS OF PRODUCTION FEDERAL RESERVE FEDERAL RESERVE BANK FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL STUDIES FIXED EFFECT FOREIGN ASSETS FOREIGN BANK FOREIGN INVESTORS FOREIGN PORTFOLIO GDP GDP PER CAPITA GLOBALIZATION GOVERNMENT REGULATION IMPORT INCOME INCREASING RETURNS INCREASING RETURNS TO SCALE INDICATOR VARIABLE INSTITUTIONAL DEVELOPMENT INTELLECTUAL PROPERTY INTEREST RATE INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL COMPETITION INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTMENT ALLOCATION INVISIBLE HAND LABOR MARKET LIBERALIZATION LIBERALIZATIONS LOANABLE FUNDS MACROECONOMIC VOLATILITY MARKET CONCENTRATION MARKET DEVELOPMENT MARKET EQUITY MARKET INTEGRATION MARKET LIQUIDITY MARKET RESTRICTION MARKET SHARE MARKET SIZE MARKET TURNOVER MONETARY FUND NET CAPITAL OPEN ECONOMY OUTPUT PORTFOLIO PORTFOLIO THEORY POVERTY REDUCTION PRICE CONTROL PRIVATE CREDIT PRIVATE SECTOR CREDIT PRODUCT MARKET PRODUCT MARKETS PRODUCTION COSTS PROPERTY RIGHT PROPERTY RIGHTS RATE OF INVESTMENT RECESSIONS REFORM PROGRAMS REGULATORY OVERSIGHT RETURN RETURNS ROBUSTNESS CHECK ROBUSTNESS CHECKS RULE OF LAW SECURITIES SEMI-ELASTICITIES STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKET DEVELOPMENT STOCK MARKETS STOCK PRICES SUPPLIERS SYSTEMIC CRISES TOTAL EXPORT TOTAL FACTOR PRODUCTIVITY TRADE LIBERALIZATION TRADE OPENNESS TRADE POLICY TRADE REFORMS TRADING TRANSACTION TRANSMISSION MECHANISM TRANSPARENCY TRUST FUND TURNOVER VALUE ADDED VOLATILITY WEALTH WEIGHTS WORLD DEVELOPMENT INDICATOR |
| spellingShingle |
ACCOUNTING AGENCY PROBLEM ALLOCATION OF CAPITAL ALLOCATION OF CREDIT ASSET PRICE ASYMMETRIC INFORMATION BANK CREDIT BANK ENTRY BANK LENDING BANKING CRISES BANKING CRISIS BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SECTORS BANKING SYSTEM BARRIER BARRIER TO ENTRY BEHAVIOR OF PRICES BORROWING COSTS BUSINESS CYCLE BUSINESS ENVIRONMENT BUSINESS REGULATION CAPITAL ACCOUNT CAPITAL ACCOUNT LIBERALIZATION CAPITAL ACCOUNT LIBERALIZATIONS CAPITAL ACCOUNT OPENNESS CAPITAL ALLOCATION CAPITAL CONTROLS CAPITAL GOODS CAPITAL INTENSITY CAPITAL MARKET CAPITAL MARKET LIBERALIZATION CENTRAL BANKS CHECKS COMMODITY COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES COMPETITIVENESS CONTRACT ENFORCEMENT CORPORATE GOVERNANCE COST OF CAPITAL CREDIT AVAILABILITY CREDIT MARKET CURRENCY CURRENCY CRISES CURRENCY CRISIS DATA AVAILABILITY DEPENDENT VARIABLE DEPENDENT VARIABLES DEPOSIT DEREGULATION DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DOMESTIC BANK DOMESTIC BANKING DOMESTIC BANKING SECTOR DOMESTIC CREDIT DOMESTIC CURRENCY DOMESTIC EQUITIES DOMESTIC EQUITY DOMESTIC SECURITIES DOMESTIC STOCK DOMESTIC STOCK MARKET DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC REFORM ECONOMIC RESEARCH EMERGING MARKET EMERGING MARKET EQUITY ENTRY BARRIERS EQUITY MARKET EQUITY MARKETS EQUITY PRICES ESTIMATION STRATEGY EXPLANATORY VARIABLES EXPORT GROWTH EXPORT MARKET EXPORT MARKETS EXPORT PERFORMANCE EXPORT SHARE EXPORT VOLUME EXPORTER EXPORTERS EXPORTS EXPOSURE EXTERNAL ASSETS EXTERNAL FINANCE FACTORS OF PRODUCTION FEDERAL RESERVE FEDERAL RESERVE BANK FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL STUDIES FIXED EFFECT FOREIGN ASSETS FOREIGN BANK FOREIGN INVESTORS FOREIGN PORTFOLIO GDP GDP PER CAPITA GLOBALIZATION GOVERNMENT REGULATION IMPORT INCOME INCREASING RETURNS INCREASING RETURNS TO SCALE INDICATOR VARIABLE INSTITUTIONAL DEVELOPMENT INTELLECTUAL PROPERTY INTEREST RATE INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL COMPETITION INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTMENT ALLOCATION INVISIBLE HAND LABOR MARKET LIBERALIZATION LIBERALIZATIONS LOANABLE FUNDS MACROECONOMIC VOLATILITY MARKET CONCENTRATION MARKET DEVELOPMENT MARKET EQUITY MARKET INTEGRATION MARKET LIQUIDITY MARKET RESTRICTION MARKET SHARE MARKET SIZE MARKET TURNOVER MONETARY FUND NET CAPITAL OPEN ECONOMY OUTPUT PORTFOLIO PORTFOLIO THEORY POVERTY REDUCTION PRICE CONTROL PRIVATE CREDIT PRIVATE SECTOR CREDIT PRODUCT MARKET PRODUCT MARKETS PRODUCTION COSTS PROPERTY RIGHT PROPERTY RIGHTS RATE OF INVESTMENT RECESSIONS REFORM PROGRAMS REGULATORY OVERSIGHT RETURN RETURNS ROBUSTNESS CHECK ROBUSTNESS CHECKS RULE OF LAW SECURITIES SEMI-ELASTICITIES STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKET DEVELOPMENT STOCK MARKETS STOCK PRICES SUPPLIERS SYSTEMIC CRISES TOTAL EXPORT TOTAL FACTOR PRODUCTIVITY TRADE LIBERALIZATION TRADE OPENNESS TRADE POLICY TRADE REFORMS TRADING TRANSACTION TRANSMISSION MECHANISM TRANSPARENCY TRUST FUND TURNOVER VALUE ADDED VOLATILITY WEALTH WEIGHTS WORLD DEVELOPMENT INDICATOR Kukenova, Madina Financial Liberalization and Allocative Efficiency of Capital |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 5670 |
| description |
Financial liberalization may have a
positive effect on growth not only through the increase in
the quantity of the available funds, but also through a more
efficient allocation of resources across firms and sectors.
Despite this intuitive appeal, there is little empirical
evidence on the positive effect of financial liberalization
on capital allocation. The main difficulty of investigating
the linkage between liberalization of financial markets and
capital allocation efficiency lies in the fact that the
efficiency of capital allocation is not directly observable.
One way to address this issue is to evaluate the effect of
financial liberalization within the Heckscher-Ohlin
framework. Producing and exporting products inconsistent
with a country's factor endowments constitutes a
serious misallocation of the funds, which undermines
competitiveness of the economy and inhibits its long run
growth. This paper tests the allocative efficiency
hypothesis by evaluating the effect of stock market
liberalization on the survival of different product
categories using export data for 91 countries over the
period of 1975-2003. Preliminary results suggest that after
liberalization of the domestic stock market, products
employing intensively scarce factors exit at a relatively
higher rate from a country's export portfolio. In other
words, following liberalization episodes, a country tends to
rebalance its export portfolio towards products consistent
with its factor's endowments. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Kukenova, Madina |
| author_facet |
Kukenova, Madina |
| author_sort |
Kukenova, Madina |
| title |
Financial Liberalization and Allocative Efficiency of Capital |
| title_short |
Financial Liberalization and Allocative Efficiency of Capital |
| title_full |
Financial Liberalization and Allocative Efficiency of Capital |
| title_fullStr |
Financial Liberalization and Allocative Efficiency of Capital |
| title_full_unstemmed |
Financial Liberalization and Allocative Efficiency of Capital |
| title_sort |
financial liberalization and allocative efficiency of capital |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110530053946 http://hdl.handle.net/10986/3433 |
| _version_ |
1764386990040547328 |
| spelling |
okr-10986-34332021-04-23T14:02:09Z Financial Liberalization and Allocative Efficiency of Capital Kukenova, Madina ACCOUNTING AGENCY PROBLEM ALLOCATION OF CAPITAL ALLOCATION OF CREDIT ASSET PRICE ASYMMETRIC INFORMATION BANK CREDIT BANK ENTRY BANK LENDING BANKING CRISES BANKING CRISIS BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SECTORS BANKING SYSTEM BARRIER BARRIER TO ENTRY BEHAVIOR OF PRICES BORROWING COSTS BUSINESS CYCLE BUSINESS ENVIRONMENT BUSINESS REGULATION CAPITAL ACCOUNT CAPITAL ACCOUNT LIBERALIZATION CAPITAL ACCOUNT LIBERALIZATIONS CAPITAL ACCOUNT OPENNESS CAPITAL ALLOCATION CAPITAL CONTROLS CAPITAL GOODS CAPITAL INTENSITY CAPITAL MARKET CAPITAL MARKET LIBERALIZATION CENTRAL BANKS CHECKS COMMODITY COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES COMPETITIVENESS CONTRACT ENFORCEMENT CORPORATE GOVERNANCE COST OF CAPITAL CREDIT AVAILABILITY CREDIT MARKET CURRENCY CURRENCY CRISES CURRENCY CRISIS DATA AVAILABILITY DEPENDENT VARIABLE DEPENDENT VARIABLES DEPOSIT DEREGULATION DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DOMESTIC BANK DOMESTIC BANKING DOMESTIC BANKING SECTOR DOMESTIC CREDIT DOMESTIC CURRENCY DOMESTIC EQUITIES DOMESTIC EQUITY DOMESTIC SECURITIES DOMESTIC STOCK DOMESTIC STOCK MARKET DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC REFORM ECONOMIC RESEARCH EMERGING MARKET EMERGING MARKET EQUITY ENTRY BARRIERS EQUITY MARKET EQUITY MARKETS EQUITY PRICES ESTIMATION STRATEGY EXPLANATORY VARIABLES EXPORT GROWTH EXPORT MARKET EXPORT MARKETS EXPORT PERFORMANCE EXPORT SHARE EXPORT VOLUME EXPORTER EXPORTERS EXPORTS EXPOSURE EXTERNAL ASSETS EXTERNAL FINANCE FACTORS OF PRODUCTION FEDERAL RESERVE FEDERAL RESERVE BANK FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL STUDIES FIXED EFFECT FOREIGN ASSETS FOREIGN BANK FOREIGN INVESTORS FOREIGN PORTFOLIO GDP GDP PER CAPITA GLOBALIZATION GOVERNMENT REGULATION IMPORT INCOME INCREASING RETURNS INCREASING RETURNS TO SCALE INDICATOR VARIABLE INSTITUTIONAL DEVELOPMENT INTELLECTUAL PROPERTY INTEREST RATE INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL COMPETITION INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTMENT ALLOCATION INVISIBLE HAND LABOR MARKET LIBERALIZATION LIBERALIZATIONS LOANABLE FUNDS MACROECONOMIC VOLATILITY MARKET CONCENTRATION MARKET DEVELOPMENT MARKET EQUITY MARKET INTEGRATION MARKET LIQUIDITY MARKET RESTRICTION MARKET SHARE MARKET SIZE MARKET TURNOVER MONETARY FUND NET CAPITAL OPEN ECONOMY OUTPUT PORTFOLIO PORTFOLIO THEORY POVERTY REDUCTION PRICE CONTROL PRIVATE CREDIT PRIVATE SECTOR CREDIT PRODUCT MARKET PRODUCT MARKETS PRODUCTION COSTS PROPERTY RIGHT PROPERTY RIGHTS RATE OF INVESTMENT RECESSIONS REFORM PROGRAMS REGULATORY OVERSIGHT RETURN RETURNS ROBUSTNESS CHECK ROBUSTNESS CHECKS RULE OF LAW SECURITIES SEMI-ELASTICITIES STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKET DEVELOPMENT STOCK MARKETS STOCK PRICES SUPPLIERS SYSTEMIC CRISES TOTAL EXPORT TOTAL FACTOR PRODUCTIVITY TRADE LIBERALIZATION TRADE OPENNESS TRADE POLICY TRADE REFORMS TRADING TRANSACTION TRANSMISSION MECHANISM TRANSPARENCY TRUST FUND TURNOVER VALUE ADDED VOLATILITY WEALTH WEIGHTS WORLD DEVELOPMENT INDICATOR Financial liberalization may have a positive effect on growth not only through the increase in the quantity of the available funds, but also through a more efficient allocation of resources across firms and sectors. Despite this intuitive appeal, there is little empirical evidence on the positive effect of financial liberalization on capital allocation. The main difficulty of investigating the linkage between liberalization of financial markets and capital allocation efficiency lies in the fact that the efficiency of capital allocation is not directly observable. One way to address this issue is to evaluate the effect of financial liberalization within the Heckscher-Ohlin framework. Producing and exporting products inconsistent with a country's factor endowments constitutes a serious misallocation of the funds, which undermines competitiveness of the economy and inhibits its long run growth. This paper tests the allocative efficiency hypothesis by evaluating the effect of stock market liberalization on the survival of different product categories using export data for 91 countries over the period of 1975-2003. Preliminary results suggest that after liberalization of the domestic stock market, products employing intensively scarce factors exit at a relatively higher rate from a country's export portfolio. In other words, following liberalization episodes, a country tends to rebalance its export portfolio towards products consistent with its factor's endowments. 2012-03-19T18:02:24Z 2012-03-19T18:02:24Z 2011-05-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110530053946 http://hdl.handle.net/10986/3433 English Policy Research working paper ; no. WPS 5670 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |