Abstract

Using a sample of 686 investable firms from 26 emerging market countries, I show that equity market liberalizations do not result in an increase in externally-financed growth rates for participating firms. In fact, I find to the contrary. The average firm appears to rely less and not more on external-financing once they become investable. These findings are in line with recent work which shows that firms issue less equity capital post-liberalization, and suggest that the gains from equity market liberalizations may not be attributable to a reduction in financing constraints.