باز بودن مالی و نقدینگی بازار در بازارهای نوظهور Financial openness and market liquidity in emerging markets

1. Introduction Against a backdrop of growing globalization and Internet use, worldwide financial markets have become increasingly more integrated over the last decade, prompting cross-border trade between developed countries, and the rapid growth of emerging economies (Lane and Miles-Ferretti, 2001, 2003, 2008). The globalization of financial markets has caused structural changes in capital markets across the world. In particular, modes of saving and investment in emerging economies induce structural changes in their financial markets as they become increasingly more open. Moreover, financial market liberalizations, accompanied by more financial and technical resources from advanced economies flow into the young emerging countries are expected to boost their domestic productivity and promoting market development (Kose et al., 2009). Capital market globalization strengthens the links between the financial markets of industrialized countries and emerging economies, and then encourages the trading of assets (e.g., bonds, shares, and currencies) between markets, banks, firms, and governments. Levine and Zervos (1996) show that financial liberalization results in an increase in stock market liquidity. Levin (2005) suggests that although the significant differences in financial market development across countries exist, the capital markets globalization allows emerging economies to obtain funds at substantially low costs in global capital market. Therefore, emerging economies can accumulate capital, and increase the size of local financial markets. Moreover, previous studies have observed that opening financial markets in emerging economies fosters the development of local financial intermediaries in the following ways: (1) By enabling local financial markets to expand, opening financial market renders financial intermediaries more efficient, causing monetary regulations to be lifted, and enabling floating interest rates to enhance competition between institutions, thereby reducing capital costs (Baldwin and Forslid, 2000).