The Quality Effect: Does Financial Liberalization Improve the Allocation of Capital?

The study documents evidence of a ""quality effect"" of financial liberalization on allocative efficiency, which is measured by the dispersion in Tobin''s Q across firms. Based on a simple model, the authors predict that financial liberalization, by equalizing access to...

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Bibliographic Details
Main Author: Abiad, Abdul (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 2004
Series:IMF Working Papers Working Paper No. 04/112
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Summary:The study documents evidence of a ""quality effect"" of financial liberalization on allocative efficiency, which is measured by the dispersion in Tobin''s Q across firms. Based on a simple model, the authors predict that financial liberalization, by equalizing access to credit, reduces the variation in expected marginal returns. They test this prediction using a new financial liberalization index and firm-level data for five emerging markets: India, Jordan, Korea, Malaysia, and Thailand. They find strong evidence that financial liberalization, rather than financial deepening, improves allocative efficiency
Physical Description:1 Online-Ressource (35 p)
ISBN:1451853637
9781451853636

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