Does Financial Liberalization Improve the Allocation of Investment?: Micro Evidence from Developing Countries
Preprint
- 1 April 2002
- preprint
- Published by Elsevier in SSRN Electronic Journal
Abstract
Has financial liberalization improved the efficiency with which investment funds are allocated to competing uses? In this paper, we address this question using firm-level panel data from 12 developing countries. We develop a summary index of the efficiency of investment allocation that measures whether, and to what extent, investment funds are going to firms with a higher marginal return to capital. We then examine the relationship between this index and various measures of financial liberalization. The results suggest that in the majority of cases financial reform has led to an increase in the efficiency with which investment funds are allocated.Keywords
This publication has 33 references indexed in Scilit:
- Bank Regulation and Supervision: What Works Best?Published by National Bureau of Economic Research ,2002
- When Does Capital Account Liberalization Help More than It Hurts?Published by National Bureau of Economic Research ,2001
- Monetary Instability, the Predictability of Prices, and the Allocation of Investment: An Empirical Investigation Using U.K. Panel DataAmerican Economic Review, 2001
- Does Financial Liberalization Spur Growth?Published by National Bureau of Economic Research ,2001
- The Regulation and Supervision of Banks around the World: A New DatabaseBrookings-Wharton Papers on Financial Services, 2001
- Does Financial Reform Raise or Reduce Saving?The Review of Economics and Statistics, 2000
- Finance and the sources of growthJournal of Financial Economics, 2000
- Multi-agency radiation survey and site investigation manual (MARSIM). Final reportPublished by Office of Scientific and Technical Information (OSTI) ,1997
- An overview of financial reform episodesPublished by Cambridge University Press (CUP) ,1995
- The Present Value of Profits and Cyclical Movements in InvestmentEconometrica, 1986