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Do stock market liberalizations cause investment booms?

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Henry, Peter Blair·2000·Journal of Financial Economics
DOI 10.1016/s0304-405x(00)00073-8
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Abstract

Stock market liberalizations lead private investment booms. In a sample of 11 developing countries that liberalized their stock markets, 9 experience growth rates of private investment above their non-liberalization median in the first year after liberalizing. In the second and third years after liberalization, this number is 10 of 11 and 8 of 11, respectively. The mean growth rate of private investment in the three years immediately following stock market liberalization exceeds the sample mean by 22 percentage points. The evidence stands in sharp contrast to recent work that suggests capital account liberalization has no effect on investment.

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  • Debt-based capital flows could cause crises if bad news leads creditors to rush to obtain their funds.

    “Debt based capital flows could cause crises if there is bad news and creditors rush in to obtain their funds.”

    From Stock Market Development in Sub-Saharan Africa: Critical Issues and Challenges (2007) · cites this paper as Henry, 2000

  • Liberalization of capital markets in many countries has increased the flow of foreign investment into them.

    “The liberalization of capital markets in many countries has increased not only the flow of foreign investment into them, as Henry (2000) and Stulz (1999) document”

    From Investor protection and corporate governance (2000) · cites this paper as Henry (2000)

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Authors
Henry, P. B.
Affiliations
Stanford University (US)
Corresponding author
Henry, Peter Blair
Venue
Journal of Financial Economics
Publisher
Elsevier BV
Published
2000
Volume
58
Issue
1-2
Pages
301-334
ISSN
0304-405X (ISSN-L)
DOI
10.1016/s0304-405x(00)00073-8
OpenAlex
W2016971986
Cited by
864
References
44
Citations by year
2026: 13 · 2025: 29 · 2024: 25 · 2023: 53 · 2022: 26 · 2021: 36 · 2020: 31 · 2019: 24 · 2018: 28 · 2017: 26 · 2016: 30 · 2015: 29 · 2014: 29 · 2013: 27 · 2012: 29
FWCI
58.77
Type
journal article
Language
en
Open access
Licence
Locations
Journal of Financial Economics (publishedVersion, cc-by-nc-nd)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Finance › Global Financial Crisis and Policies
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
  • Social Sciences › Economics, Econometrics and Finance › Finance › Finance, Markets, and Regulation
Keywords
stock market liberalization, investment boom, capital account liberalization, developing countries, financial liberalization, investment growth rate

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