ARTICLE

CAN OPENNESS HYPOTHESIS IMPROVE POLITICAL ECONOMY OF PAKISTANS FINANCIAL MARKET

  1. HOME
  2. ARTICLE

06 Pages : 56-65

http://dx.doi.org/10.31703/gpr.2018(III-I).06      10.31703/gpr.2018(III-I).06      Published : Jun 2018

Can Openness Hypothesis Improve Political Economy of Pakistans Financial Market?

Abstract

    This paper is an attempt to test the openness hypothesis for the case of Pakistan. Being a developing country and having different interest groups interfering in the financial market, openness hypothesis provides a theory that provides a win-win situation for the interest groups, consequently improving financial development. We presented a political economy approach of analyzing the state of Pakistans financial market and proposed an openness hypothesis. Our result indicates that individually, trade and financial opening are beneficial for improving the financial market development however, the simultaneous opening of financial and trade hypothesis does not hold for Pakistan. In other words, the simultaneous opening of financial and trade accounts does not seem to be a necessary condition for improving the financial sector.

    Financial Development, Openness hypothesis, Political economy, Regression analysis, Financial Liberalization, Trade openness.

    (1) Jawad Ahmad
    Research Associate, University of Kassel, Hessen, Germany.
    (2) Sania Zehraa
    Research Scholar, International Islamic University, Islamabad, Pakistan.
    (3) Noor Jehan
    Assistant Professor,Department of Economics,Abdul Wali Khan University, Mardan, KP, Pakistan.
Fulltext PDF

References

  • Ahmad, J. (2019). Determinants of Financial Development and Their Impact on Financial Integration (unpublished). University of Kassel.
  • Amna, K. (2011, November). History of banking in Pakistan - of humble origins and vast potential. The Express Tribune. Retrieved from https://tribune.com.pk/story/286458/history-of-banking-inpakistan--of-humble-origins-and-vastpotential/?__cf_chl_jschl_tk__=4261526a7bc056a66f5c595d3be3cca6f6b5d6e6-1577746853- 0-ATYZg3QpIqXCo2CnSD6ihV- _2AR8nYsNGBoDxpvqsygXusvSOXSTbM_abCQ2UTWzdd3ag6OAtWw
  • Ang, J. (2008). A Survey of Recent Developments in the Literature of Finance and Growth. Ssrn, 22(3), 536-576.
  • Ang, J. S., & Boyer, C. M. (2000). Finance and Politics: Special Interest Group Influence during the Nationalization and Privatization of Conrail. SSRN Electronic Journal.
  • Baltagi, B. H., Demetriades, P. O., & Law, S. H. (2009). Financial development and openness: Evidence from panel data. Journal of Development Economics, 89(2), 285-296.
  • Beck, T., Demirgüç-Kunt, A., Levine, R., Demirg-Kunt, A., & Levine, R. (2003). Law, endowments, and finance. Journal of Financial Economics, 70(2), 137-181.
  • Beck, T., Levine, R., & Loayza, N. (2000). Finance and the sources of growth. Journal of Financial Economics, 58(1-2), 261-300.
  • Chinn, M. D., & Ito, H. (2006). What matters for financial development? Capital controls, institutions, and interactions. Journal of Development Economics, 81(1), 163-192.
  • Daron, A., Simon, J., & Robinson. James A. (2011). The Colonial Origins of Comparative Development: An empirical investigation. The American Economic Review, 91(5), 1369-1401.
  • Demetriades, P., & Law, S. H. (2007). Financial Development, Openness and Institutions:Evidence from Panel Data (No. 07/05). Working Paper. University of Leicester
  • Demetriades, P. O., & Andrianova, S. (2004). Finance and Growth: What We Know and What We Need To Know. In Financial Development and Economic Growth (pp. 1-25). Springer.
  • Din, M.-U. (2004). Exports, Imports, and Economic Growth in South Asia: Evidence Using a Multivariate Time-series Framework. The Pakistan Development Review (Vol. 43).
  • Din, M.-U., Ghani, E., & Siddique, O. (2003). Openness and Economic Growth in Pakistan. The Pakistan Development Review (Vol. 42).
  • Gurley, J. G., & Shaw, E. S. (1955). Financial aspects of economic development. The American Economic Review, 45(4), 515-538.
  • Huang, W. (2006). Emerging markets financial openness and financial development. efm.bris.ac.uk. Retrieved from http://www.efm.bris.ac.uk/economics/working_papers/pdffiles/dp06588.pdf
  • Huang, Y., & Temple, J. (2005). Does External Trade Promote Financial Development? Discussion Paper Series- Centre for Economic Policy Research London, (05), ALL.
  • Kose, A., Prasad, E., Rogoff, K., & Shang, J. W. (2006). Financial Globalization: A Reappraisal (No. 12484). Working Paper
  • Kroszner, R. S. (1999). Is It Better to Forgive than to Recieve?Repudiation of the Gold indexation clause in Long-Term Debt during the Great Depression.
  • La Porta, R., Lopez-De-Silanes, F., Shleifer, A., & Vishny, R. W. (1997). Legal determinants of external finance. Journal of Finance, 52(3), 1131-1150.
  • La, R., Silanes, F. L. De, Shleifer, A., Vishny, R. W., Journal, S., & December, N. (1998). Law and Finance. Journal of Political Economy, 106(6), 1113-1155.
  • Lane, P. R., & Milesi-Ferretti, G. M. (2007). The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004. Journal of International Economics, 73(2), 223-250.
  • Law, S. H. (2008). Does a country's openness to trade and capital accounts lead to financial development? Evidence from Malaysia. Asian Economic Journal, 22(2), 161-177.
  • Levchenko, A. A., & Quy-Toan, D. (2004). Trade and Financial Development * Quy-Toan Do The World Bank (WPS No. 3347).
  • Levine, R. (1997). Financial Development and Economic Growth : Views and Agenda. Journal of Economic Literature, 35(2), 688-726.
  • Levine, R. (2004). Finance and Growth : Theory and Evidence. NBER WORKING PAPER SERIES; Handbook of Economic Growth, (September), 0-117.
  • Luigi, G., Paola, S., & Luigi, Z. (2004). The Role of Social Capital in Financial Development. American Economic Review, 94(3), 526-556.
  • McKinnon, R. (1973). Money and capital in economic development. Book. Washington, DC: Brookings Institution.
  • McKinnon, R. I. (1991). Financial Control in the Transition from Classical Socialism to a Market Economy. Journal of Economic Perspectives, 5(4), 107-122.
  • Ozdemir, Durmus, Erbil, C. (2008). Does Financial Liberalization Trigger long-run Economic Growth ? Evidence from Turkey and Other Recent EU Members.
  • Rajan, R. G., & Zingales, L. (2003). The great reversals: The politics of financial development in the twentieth century. Journal of Financial Economics, 69(1), 5-50.
  • Robinson, J. (1952). The Generalisation of the General Theory and other Essays (second). Macmillan, London.
  • Rodrik, D. (1998). Who Needs Capital Account Convertibility. (No. Princeton Essay in International Finance.).
  • Shahbaz, M., Azim, P., & Ahmad, K. (2011). Exports-led growth hypothesis in Pakistan: further evidence. Asian Economic and Financial Review, 1(3), 182-197.
  • Shaw, E. S. (1973). Financial deepening in economic development. New York, NY (USA) Oxford Univ. Press.
  • Stulz, R. M., & Williamson, R. (2003). Culture, openness, and finance. Journal of Financial Economics, 70(3), 313-349.
  • Thorsten Beck, A. D.-K. and R. L. (2000). A New Database on Financial Development and Structure,. World Bank Economic Review, 14, 597-605.
  • Zhang, C., Zhu, Y., & Lu, Z. (2015). Trade openness, financial openness, and financial development in China. Journal of International Money and Finance, 59, 287-309.

Cite this article

APA

    APA : Ahmad, J., Zehraa, S., & Jehan, N. (2018). Can Openness Hypothesis Improve Political Economy of Pakistans Financial Market?. Global Political Review, III(I), 56-65. https://doi.org/10.31703/gpr.2018(III-I).06

CHICAGO

    CHICAGO : Ahmad, Jawad, Sania Zehraa, and Noor Jehan. 2018. "Can Openness Hypothesis Improve Political Economy of Pakistans Financial Market?." Global Political Review, III (I): 56-65 doi: 10.31703/gpr.2018(III-I).06

HARVARD

    HARVARD : AHMAD, J., ZEHRAA, S. & JEHAN, N. 2018. Can Openness Hypothesis Improve Political Economy of Pakistans Financial Market?. Global Political Review, III, 56-65.

MHRA

    MHRA : Ahmad, Jawad, Sania Zehraa, and Noor Jehan. 2018. "Can Openness Hypothesis Improve Political Economy of Pakistans Financial Market?." Global Political Review, III: 56-65

MLA

    MLA : Ahmad, Jawad, Sania Zehraa, and Noor Jehan. "Can Openness Hypothesis Improve Political Economy of Pakistans Financial Market?." Global Political Review, III.I (2018): 56-65 Print.

OXFORD

    OXFORD : Ahmad, Jawad, Zehraa, Sania, and Jehan, Noor (2018), "Can Openness Hypothesis Improve Political Economy of Pakistans Financial Market?", Global Political Review, III (I), 56-65

TURABIAN

    TURABIAN : Ahmad, Jawad, Sania Zehraa, and Noor Jehan. "Can Openness Hypothesis Improve Political Economy of Pakistans Financial Market?." Global Political Review III, no. I (2018): 56-65. https://doi.org/10.31703/gpr.2018(III-I).06