TY  - JOUR
AU  - Bekaert,Geert
AU  - Harvey,Campbell R.
AU  - Lundblad,Christian
TI  - Financial Openness and Productivity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14843
PY  - 2009
Y2  - April 2009
UR  - http://www.nber.org/papers/w14843
L1  - http://www.nber.org/papers/w14843.pdf
N1  - Author contact info:
Geert Bekaert
Graduate School of Business
Columbia University
3022 Broadway, 411 Uris Hall
New York, NY 10027
Tel: 212/854-9156
Fax: 212/662-8474
E-Mail: gb241@columbia.edu

Campbell R. Harvey
Fuqua School of Business
Duke University
Durham, NC 27708-0120
Tel: 919/660-7768
Fax: 919/660-8030
E-Mail: cam.harvey@duke.edu

Christian Lundblad
Department of Finance
University of North Carolina at Chapel Hill
Chapel Hill, NC  27599-3490
Tel: 919-962-8441
Fax: 707-371-7060
E-Mail: Christian_Lundblad@unc.edu
M1  - published as 


AB  - Financial openness is often associated with higher rates of economic growth. We show that the impact of openness on factor productivity growth is more important than the effect on capital growth. This explains why the growth effects of liberalization appear to be largely permanent, not temporary. We attribute these permanent liberalization effects to the role financial openness plays in stock market and banking sector development, and to changes in the quality of institutions. We find some indirect evidence of higher investment efficiency post-liberalization. We also document threshold effects: countries that are more financially developed or have higher quality of institutions experience larger productivity growth responses. Finally, we show that the growth boost from openness outweighs the detrimental loss in growth from global or regional banking crises.
ER  -