Capital Control Stock markets become larger, more liquid, more integrated Liberalization and Stock internationally, and more volatile after controls on capital and dividend flowas are liberalized. And countries that Ross Levine officially establish Sara Zervos internationally accepted accounting standards and laws to protect investors do not have substantially be..erfunctioning stock markets th...

Article history: Received 29 August 2012 Received in revised form 21 May 2013 Accepted 6 August 2013 Available online 15 August 2013 We test the impact of idiosyncratic risk on stock returns for emerging markets that experience financial market liberalizations. Idiosyncratic risk is positively associated with returns prior to financial market liberalization, but liberalization diminishes this e...

Motivated by the non-linear and S-shaped pattern between trade liberalization and capital inflow observed in cross country data, this paper offers a new perspective in understanding the relation between these two. The static model nests Melitz style heterogenous firms with endogenous mark-up within a classical Heckscher-Ohlin style comparative advantage frame work. In this integrated model trad...

China maintains tight controls over its capital account. Its current policy regime also features financial repression, under which banks are required to extend funds state-owned enterprises (SOEs) at favorable terms, despite their lower average productivity than private firms. We incorporate these into a general equilibrium model. Our model illustrates tradeoff between aggregate and inter-tempo...

During the last few decades, many emerging markets have lifted restrictions on cross-border financial transactions. The conventional view was that this would allow these countries to: (i) receive capital inflows from advanced countries that would finance higher investment and growth; (ii) insure against aggregate shocks and reduce consumption volatility; and (iii) accelerate the development of ...

This paper provides compelling evidence that equity market liberalization, as the most efficient way to smooth financial market frictions such as credit constraints, can alleviate persistent cross-dynastic income inequality by promoting increased human capital accumulation. The authors examine the effect of equity market liberalization on inequality by using data from 72 countries for 1980–2006...