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

Abiad, Abdul; Oomes, Nienke; Ueda, Kenichi

doi:10.5089/9781451853636.001

Cited by 70 publications

(80 citation statements)

References 29 publications

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“…A plausible explanation is that the anomalies are caused by a change in the financial sector policy. In fact, Abiad, Oomes and Ueda (2004) report that financial liberalization took place in Thailand from the mid‐1980's on and, more importantly, that under their measure of efficiency, capital allocation improved in the mid‐1980’s. In short, there seems to have been a policy change.…”

Section: Growth Inequality and Financial Deepening: Examining Thmentioning

confidence: 99%

Financial Deepening, Inequality, and Growth: A Model-Based Quantitative Evaluation1

2006

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We propose a coherent unified approach to the study of the linkages among economic growth, financial structure, and inequality, bringing together disparate theoretical and empirical literature. That is, we show how to conduct model‐based quantitative research on transitional paths. With analytical and numerical methods, we calibrate and make tractable a prototype canonical model and take it to an application, namely, Thailand 1976–1996, an emerging market economy in a phase of economic expansion with uneven financial deepening and increasing inequality. We look at the expected path generated by the model and conduct robustness experiments. Because the actual path of the Thai economy is imagined here to be just one realization of many possible histories of the model economy, we construct a covariance‐normalized squared error metric of closeness and find the best‐fit simulation. We also construct a confidence region from a set of simulations and formally test the model. We broadly replicate the actual data and identify anomalies.

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Section: Growth Inequality and Financial Deepening: Examining Thmentioning

confidence: 99%

Financial Deepening, Inequality, and Growth: A Model-Based Quantitative Evaluation1

2006

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“…These financial variables focus on financial deepening, rather than financial liberalization. find evidence that liberalization may matter more than deepening, using data from five emerging‐market economies. We do not consider measures of financial liberalization due to data availability.…”

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confidence: 99%

Firm Productivity, Innovation, and Financial Development

Dabla‐Norris

Kersting

Verdier

2012

Southern Economic Journal

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How do firm‐specific actions—in particular, innovation—affect firm productivity? What is the role of the financial sector in facilitating higher productivity? Using a rich firm‐level data set, we find that innovation is crucial for firm performance as it directly and measurably increases productivity. The impact of innovation on productivity is larger in less‐developed countries. Evidence of financial sector development influencing the innovation‐productivity link is weak, but the effect is difficult to identify due to correlation between indicators of a country's financial and nonfinancial development. Furthermore, we find evidence that the innovation effect on productivity is more significant for high‐tech firms than for low‐tech firms.

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“…So it has to be measured well. Abiad et al (2004) find that liberalization improves efficiency (reduces Tobin's Q dispersion), although financial deepening does not, ceteris paribus .…”

Section: Measurement and The National Income And Product Accountsmentioning

confidence: 87%

Financial Structure and Economic Welfare: Applied General Equilibrium Development Economics

Townsend

2010

Annu. Rev. Econ.

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This review provides a common framework for researchers thinking about the next generation of micro-founded macro models of growth, inequality, and financial deepening, as well as direction for policy makers targeting microfinance programs to alleviate poverty. Topics include treatment of financial structure general equilibrium models: testing for as-if-complete markets or other financial underpinnings; examining dual-sector models with both a perfectly intermediated sector and a sector in financial autarky, as well as a second generation of these models that embeds information problems and other obstacles to trade; designing surveys to capture measures of income, investment/savings, and flow of funds; and aggregating individuals and households to the level of network, village, or national economy. The review concludes with new directions that overcome conceptual and computational limitations.

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

Cited by 70 publications

References 29 publications

Financial Deepening, Inequality, and Growth: A Model-Based Quantitative Evaluation1

Financial Deepening, Inequality, and Growth: A Model-Based Quantitative Evaluation1

Firm Productivity, Innovation, and Financial Development

Financial Structure and Economic Welfare: Applied General Equilibrium Development Economics

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