DOES STOCK MARKET LIBERALISATION BENEFIT THE ECONOMY? EVIDENCE FROM INDUSTRY-LEVEL DATA

The paper examines the impact of stock market liberalisation on four industry-level economic variables, i) growth in real value added, ii) growth in real wages per worker, iii) growth in the number of employees and iv) growth in the number of firms using data on 18 developing countries for the period between 1981 - 2000. Genetic programming methodology is used to determine the liberalisation dates. Results from difference-in-differences regression indicate that stock market liberalisation has minimal impact on the growth of real value added. On the other hand, growth rates of real wages per worker, number of employees and number of firms are significantly higher for most countries after stock market liberalisation.