Does Financial Liberalization Improve the Allocation of Investment?: Micro Evidence from Developing Countries

By Arturo Galindo, F. Schiantarelli, A. Weiss. 2002

273 citations recorded by the source corpus.

In this paper, It has been addressed this question using firm-level panel data from 12 developing countries. It was also developed 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. Then it was examined the relationship between this index and various measures of financial liberalization. The results suggested that in the majority of cases financial reform has led to an increase in the efficiency with which investment funds are allocated.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/7dbdb07d2875c68a55ecab156e863b3f3a7bc0fa

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. T. Tressel
2. Saibal Ghosh
3. M. Schindler

In Economics and Econometrics

1. M. Schindler
2. L. Christiansen
3. T. Tressel
4. Saibal Ghosh
5. Linda S. Goldberg
6. Claudia M. Buch

In Finance

1. T. Tressel
2. M. Schindler
3. L. Christiansen
4. Saibal Ghosh
5. Jakob de Haan
6. J. Klomp
7. Linda S. Goldberg
8. Claudia M. Buch

Citations in the corpus

• Banks and Innovation: Microeconometric Evidence on Italian Firms (2008, unknown): “Wurgler (2000) and Galindo, Schiantarelli, and Weiss (2003) present evidence on the beneficial effect of financial development or reform on the allocation of investment funds, using, respectively, industry or firm level data. firm balance sheet variables.”
• Financial Integration, Productivity and Capital Accumulation (2008, unknown): “This rise in TFP is due to an increase in allocative efficiency, which is empirically documented by Galindo et al. (2005).”
• Did financial liberalization ease financing constraints? Evidence from Indian firm-level data (2006, background): “Using a cross-country study covering 12 developing countries, Galindo et al. (2003) finds evidence to support a significant and sizeable effect of financial liberalization on the efficiency of investment.”
• Growth and Structural Reforms: A New Assessment (2009, background): “Furthermore, Rajan and Zingales (1998), Galindo et al. (2005), Abiad et al. (2008), and Tressel (2008) provide evidence suggesting that a more 2 The literature review in this section is highly selective.”