This paper examines whether equity market liberalization facilitates economic growth at the industry level. It also explores whether equity market liberalization reduces the cost of capital by scrutinizing a particular mechanism: that liberalization reduces the wedge between the costs of...

While equity market liberalization has been found to be associated with faster economic growth, such a correlation alone cannot identify the direction of causation. Using instrumental variables (IV) methodology, this paper presents empirical evidence of strong growth effects of equity market...