Stock Market Development under Globalization : Whither the Gains from Reforms?

Over the past decades, many countries have implemented significant reforms to foster domestic capital market development. These reforms included stock market liberalization, privatization programs, and the establishment of regulatory and supervisory frameworks. Despite the intense reform efforts, the performance of capital markets in several countries has been disappointing. To study whether reforms have had the intended effects on capital markets, the authors analyze the impact of six capital market reforms on domestic stock market development and internationalization using event studies. They find that reforms tend to be followed by significant increases in domestic market capitalization, trading, and capital raising. Reforms are also followed by an increase in the share of activity in international equity markets, with potential negative spillover effects on domestic markets.

Bibliographic Details

Main Authors:	Gozzi, Juan Carlos, de la Torre, Augusto, Schmukler, Sergio L.
Language:	English
Published:	World Bank, Washington, DC 2007-04
Subjects:	ADVERSE SELECTION, AGENCY PROBLEMS, ASSET PRICING, BANK PRIVATIZATION, BANKS, BOARD OF DIRECTORS, BONDS, CAPITAL FLIGHT, CAPITAL FLOWS, CAPITAL MARKET DEVELOPMENT, CAPITAL MARKETS, CASE OF PRIVATIZATION, CORPORATE GOVERNANCE, DOMESTIC CAPITAL, DOMESTIC CAPITAL MARKET, DOMESTIC CAPITAL MARKETS, DOMESTIC INVESTORS, DOMESTIC MARKET, DOMESTIC MARKETS, DOMESTIC STOCK MARKET, ECONOMIC EFFICIENCY, EMERGING MARKETS, ENFORCEMENT MECHANISMS, EQUITY CAPITAL, EQUITY MARKETS, EXECUTIVE DIRECTORS, EXOGENOUS VARIABLES, EXPENDITURES, EXPORTS, FINANCIAL CENTERS, FINANCIAL CONDITIONS, FINANCIAL DEVELOPMENT, FINANCIAL MARKETS, FINANCIAL SERVICES, FOREIGN DIRECT INVESTMENT, FOREIGN INVESTORS, GDP, GLOBAL DEPOSITARY, GOVERNMENT INTERFERENCE, GROSS DOMESTIC PRODUCT, HOME MARKET, IMPACT OF PRIVATIZATION, INFLATION, INSIDER TRADING, INSTITUTIONAL ENVIRONMENT, INSTITUTIONAL REFORM, INSTITUTIONAL REFORMS, INTERESTS OF MINORITY SHAREHOLDERS, INTERNATIONAL BUSINESS, INTERNATIONAL CAPITAL, INTERNATIONAL CENTER, INTERNATIONAL MARKETS, INVESTMENT DECISION, INVESTOR PROTECTION, LABOR MARKET, LATIN AMERICAN, LEGAL FRAMEWORK, LEGAL SYSTEMS, LIFE INSURANCE COMPANIES, LIMITED, LIQUIDITY, LITERATURE ON PRIVATIZATION, LOCAL CAPITAL MARKETS, LOCAL MARKET, LOCAL STOCK, MACROECONOMIC POLICIES, MACROECONOMIC STABILITY, MACROECONOMIC STABILIZATION, MARKET CAPITALIZATION, MARKET DEVELOPMENT, MARKET DISTORTIONS, MARKET LIBERALIZATION, MARKET PERFORMANCE, MARKET REFORM, MARKET REFORMS, MARKET TRADING, MINORITY SHAREHOLDERS, OBJECTIVE OF PRIVATIZATION, PENSION FUNDS, PENSION SYSTEM, POLITICAL INTERFERENCE, POLITICAL RISK, POSITIVE EXTERNALITIES, PRICING MODELS, PRIVATE FIRMS, PRIVATIZATION, PRIVATIZATION ACTIVITY, PRIVATIZATION DATABASE, PRIVATIZATION LAW, PRIVATIZATION OF STATE, PRIVATIZATION PROCESS, PRIVATIZATION PROGRAM, PRIVATIZATION PROGRAMS, PRIVATIZATION SALES, PRIVATIZATION TRANSACTIONS, PRIVATIZATIONS, PROPERTY RIGHTS, PROTECTION OF MINORITY INVESTORS, PROXY, PUBLIC EXPENDITURES, PUBLIC OFFERINGS, REGULATORY FRAMEWORK, RETAIL, SALES, SHARE OFFERINGS, SHARE PRICES, STOCK EXCHANGE, STOCK EXCHANGES, STOCK MARKET CAPITALIZATION, STOCK MARKETS, STOCKS, TRADE LIBERALIZATION, TRANSITION ECONOMIES, TREASURY BILLS, TURNOVER, VALUE ADDED,
Online Access:	http://documents.worldbank.org/curated/en/2007/04/7499115/stock-market-development-under-globalization-whither-gains-reforms https://hdl.handle.net/10986/7011
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