Essays on financial liberalization

Abstract

This dissertation examines three distinct issues pertaining to financial liberalization. First, it examines the impacts of stock market liberalization on four industry-level economic variables. Results show that stock market liberalizations have little impact on the real growth rates of value added, but have positive impacts on growth rates of real wages per worker, growth rates of number of employees and growth rates of number of firms. Second, it looks at how financial liberalization affects banksa?? interest margins and profits. A negative relationship between interest margin and financial liberalization is found. There are also indications that bank profit margin increases following financial liberalization. Third, the relationship between informal credit sector size and economic growth is examined. Positive relationships between informal credit sector size and economic growth and between private investment and informal credit sector size are documented. A curvilinear relationship also exists between bank fragility and informal credit sector size.