Bekeart, Harvey, and Lundbland (2005) [12]

Investigate the impact of stock market liberalization on financial development and economic growth.

Using annual data from 1980-1997 in a panel of 95 countries. Employing OLS, Unrestricted SUR, and GMM

The level of financial development affects stock market liberalization. Financial liberalization affects countries depending on their level of financial development. Stock market liberalization promotes economic growth.


Goh, Alias, and Olekalns (2003) [13]

Investigate the role of external factors and trade openness on interest rate determination

Using quarterly data from 1973Q1-1985Q3 and from 1991Q1-1998Q3 in Malaysia. Adopting Edward and Khan Model

Financial liberalization made domestic interest rate responsive to foreign rates.


Levine and Zervos (1998) [14]

Examined the effect of capital control liberalization on stock market development

In a sample of 6 emerging countries and using Unit root and Simple Comparism.

Stock market liquidity tends to increase liberalization of international capital control. Ease and accessibility of information is positively associated with stock market development. Countries with good accounting standards, investors’ protection laws tend to have better and more developed stock markets.


Beck and Levine (2005) [5]

Examined the impact of legal institutions on financial development

Differences in legal tradition influence countries’ attitudes on private property rights protection, support for private contractual arrangements, the enactment and enforcement of investors’ protection laws. Institutions shape the willingness to save, invest, the effectiveness of the corporate governance, and the degree of financial market development


Gries, Kraft, and Meirerieks (2009) [15]

Examined the nexus financial deepening, trade openness, and economic growth

Using annual data from 1960-2004 in a sample of 16 Sub Saharan African countries. Utilizing Granger Causality based on Hsiao, Bi-Variate, and Tri-Variate VAR/VECM

Demand following relationship dominates. Only few cases points to supply leading relationship, while in few other cases, there is no significant relationship between financial deepening and economic growth.


Umutlu et al. (2010) [16]

Investigate the effect of financial liberalization on volatility of stock market returns

Using annual data from 1991-2005 in a sample of emerging markets

There is positive relationship between the degree of financial liberalization and global volatility. There is negative relationship between volatility and financial liberalization after controlling for stock market development, liquidity, countries effect, and crisis effect.


Ahmed and Suardi (2009) [17]

Investigated the effect of financial and trade liberalization on growth volatility of real output and consumption.

Using annual data from 1971-2005 in a sample of 25 Sub Saharan African countries and employing panel OLS and System GMM

Financial liberalization leads to lower volatility in output and consumption growth. Trade openness leads to economic instability. The effect of liberalization on volatility is contingent on the degree of financial development and institutional quality.


Kim et al. (2011) [18]

Probed the dynamic effect of trade openness on financial development

Using annual data from 1960-2005 in a panel of 88 countries and using Pooled Mean group

Trade openness affect financial development negatively in the short run but positively in the long run. The effect of trade openness is dependent on inflation rate and income level. There is negative short run but positive long run impact of trade openness on financial development in relatively low income and high inflation countries. There is insignificant short run but negative long run impact of trade openness on financial development in high income countries. The effect of trade openness on financial development is mixed in low inflation countries.


Baltagi et al. (2009) [9]

Examined the effect of openness on financial development

Using annual data from 1980-2003 in a panel of 42 and 34 developed and developing countries respectively and employing GMM

Openness and economic institutions are important determinant of financial sector development. There is mixed evidence for simultaneous openness hypothesis.