English, Article, Journal or magazine article edition: Does Financial Liberalization Improve the Allocation of Investment? Micro Evidence from Developing Countries Arturo Galindo; Fabio Schiantarelli; Andrew Weiss

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Bookmark: http://trove.nla.gov.au/version/72982
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Does Financial Liberalization Improve the Allocation of Investment? Micro Evidence from Developing Countries
Author
  • Arturo Galindo
  • Fabio Schiantarelli
  • Andrew Weiss
Physical Description
  • preprint
Notes
  • Has financial liberalization improved the efficiency with which investment funds are allocated to competing uses? In this paper, we address this question using firm-level panel data from 12 developing countries. We develop a summary index of the efficiency of investment allocation that measures whether, and to what extent, investment funds are going to firms with a higher marginal return to capital. We then examine the relationship between this index and various measures of financial liberalization. The results suggest that in the majority of cases financial reform has led to an increase in the efficiency with which investment funds are allocated.
  • RePEc:idb:wpaper:4295
  • Using firm level panel data from twelve developing countries we explore if financial liberalization improves the efficiency with which investment funds are allocated. A summary index of the efficiency of investment allocation that measures whether investment funds are going to firms with a higher marginal return to capital is developed. We examine the relationship between this and various measures of financial liberalization and find that liberalization increases the efficiency with which investment funds are allocated. This holds after various robustness checks and is consistent with firm level evidence that a stronger association between investment and fundamentals after financial liberalization.
  • financial liberalization, investment, efficiency, reform, development
  • RePEc:boc:bocoec:625
  • Has financial liberalization improved the efficiency with which investment funds are allocated to competing uses? In this paper, we address this question, using firm level panel data from twelve developing countries. The basic idea is to investigate whether financial liberalization has increased the share of investment going to firms with a higher marginal return to capital. To this end we develop a summary index of the efficiency of allocation of investment. We then examine the relationship between this index and various measures of financial liberalization. The results suggest that in the majority of cases financial reform has lead to an increase in the efficiency with which investment funds are allocated.
  • RePEc:boc:bocoec:503
Language
  • English
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