| Summary: | The effect of financial liberalization on economic growth in eight emerging Asian countries are analyzed in this study using financial liberalization factorssuch as foreign equity liability (FEL), Edison & Warnock (EW) ratio as well as the Lane and Milesi-Ferretti (LMF) measure. Results of the study indicate that the financial liberalization factors on gross domestic product (GDP) do not Granger cause gross domestic product (GDP) in all countries except for South Korea. Also, it was found that the financial liberalization factors forecast an increase in GDP in most of the countries. The LMF factor is found to be affected by other financial liberalization factors. These findings also provide evidence that emerging countries can benefit from an increase in financial liberalization activities. Furthermore, policy makers and investors could use these evidences to guide them in devising economic policies and investment plans.
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