Short-Run Pain, Long-Run Gain: Financial Liberalization and Stock Market Cycles

The views on financial liberalization are quite conflictive. Many argue that it triggers financial bubbles and crises. Others claim that financial liberalization allows markets to function properly and capital to move to its most profitable destination. The empirical evidence on these effects is not robust. This paper constructs a new comprehensive chronology of financial liberalization and shows that a key reason for the inconclusive evidence is that the effects of liberalization are time-varying. Financial liberalization is followed by large booms and busts only in the short run. In the long run institutions improve and financial markets tend to stabilize.

Bibliographic Details

Main Authors:	Kaminsky, Graciela Laura, Schmukler, Sergio L.
Format:	Journal Article biblioteca
Language:	EN
Published:	2008
Subjects:	Business Fluctuations, Cycles E320, Current Account Adjustment, Short-term Capital Movements F320, Information and Market Efficiency, Event Studies G140, Economic Development: Financial Markets, Saving and Capital Investment, Corporate Finance and Governance O160,
Online Access:	http://hdl.handle.net/10986/5893
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