Privatization's Impact on Financial Market Development

William Leon Megginson

in The Financial Economics of Privatization

Published in print February 2005 | ISBN: 9780195150629
Published online October 2005 | e-ISBN: 9780199835768 | DOI:
 Privatization's Impact on Financial Market Development

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This chapter examines the impact of share issue privatizations (SIPs) on the growth of world capital markets, especially stock markets. It also studies privatization’s impact on the pattern of share ownership by individuals and institutional investors. It begins by documenting the increasing importance of capital markets and the declining role of commercial banks in corporate financial systems around the world. It shows that privatization programs, particularly those involving public share offerings, have had a dramatic impact both on the development of non-US stock markets and the participation of individual and institutional investors in those markets. The components of a nation’s corporate governance system are described, and how privatization programs can promote the development of an effective corporate governance system is discussed.

Keywords: share issue privatization; SIP; stock markets; capital markets; corporate governance

Chapter.  15401 words.  Illustrated.

Subjects: Financial Markets

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