Stock market liberalization and price response: Gradualism versus cold Turkey

Daehwan Kim, Jung Inn Kim, Taeyoon Sung

Research output: Contribution to journalArticle

Abstract

We present a simple analytical framework that illustrates the impact of two types of market liberalization on stock prices: cold turkey versus gradual liberalization. Using this theoretical framework, we show that gradual stock market liberalization can have a negative impact on stock prices when such gradual liberalization increases uncertainty about future stock prices. We examine the liberalization experience of the Korean stock market, and find that our analysis could be relevant in that case.

Original languageEnglish
Pages (from-to)273-285
Number of pages13
JournalApplied Economics
Volume45
Issue number3
DOIs
Publication statusPublished - 2013 Jan 1

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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