Financial liberalization and sectoral reallocation of capital in South Africa
We examine the impact of financial reforms on efficient reallocation of capital within and between sectors in South Africa using firm-level panel data for the period 1991–2008. The measure of efficient allocation of capital is based on the Tobin’s Q. We find that financial reforms are associated with improvements in within-sector, but not between-sector allocation of capital. These results imply that for South Africa to unleash the potential for take-off that is often associated with reallocation of resources from the primitive to modern sectors, reforms that focus beyond the financial sector are necessary. While more research is necessary to determine what would fully constitute such additional reforms, our analysis shows that reforms that improve the quality of economic institutions may be a step in the right the direction.
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|Item Type:||Journal Article|
|Keywords:||Financial liberalization, Within-sector/between-sector reallocation of capital, Efficient capital allocation, Economic development, Tobin’s Q|
|Divisions:||Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
|Copyright Owner:||Copyright 2016 Springer-Verlag Berlin Heidelberg|
|Deposited On:||15 Apr 2016 02:20|
|Last Modified:||18 Apr 2016 00:52|
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