TITLE:
An Evaluation of Simultaneous Openness Hypothesis in the Context of Stock Market Development: Evidence from a Panel of Fifty Three Countries Based a GMM Study
AUTHORS:
Z. T. Abdallah
KEYWORDS:
Simultaneous Openness Hypothesis, Institutional Factors, Financial Sector Development, Principal Component, GMM
JOURNAL NAME:
Modern Economy,
Vol.7 No.2,
February
19,
2016
ABSTRACT: This paper focuses on the impact of the concurrent
liberalization of current and capital accounts and quality institutions on
stock market development. Using annual data from 1996-2013 for a panel of fifty
three (53) developed and developing countries and utilizing dynamic GMM estimators,
the results show that banking sector development, economic growth, and the
interaction term affect stock market development positively. The paper finds
that capital account liberalization affects market development negatively, but
the effect of capital account liberalization on market development is
contingent on the level of economic growth and development. Further, the
results revealed that the impact of trade openness on stock market development
is mixed. The research finds negative impact of institutional factors on market
development. Finally, the paper does not find support in favour of simultaneous
openness hypothesis.