In May of 1986, the Philippines liberalized its stock market, meaning that it began allowing foreign individuals and businesses to invest money in Filipino companies. This was part of a wave of stock market liberalizations around the world—Malaysia in 1987, Morocco in 1988, and so on. The standard view among economists at the time was that liberalization would make it easier for companies to raise money from investors. Economist Peter Blair Henry examined the economies of 11 countries that were part of the liberalization wave and found that, on average, companies based in those countries received significant increases in investment in the three years following liberalization, suggesting that ______
Which choice most logically completes the text?
Explanation
Context: In 1986, the Philippines liberalized its stock market. The standard view was that liberalization helps companies raise money. Henry studied 11 countries that underwent liberalization. The blank states what Henry found — the clue is "the standard view" and testing it empirically.
Answer: D) empirical evidence was consistent with the scholarly consensus about the consequences of liberalization.
Why? Henry tested the standard view and found companies could raise more money after liberalization — confirming the consensus. D states this confirmation directly.
Traps:
- A) Malaysia had greater increase → specific country comparison not established as Henry's key finding
- B) economists who held standard view failed → not what an empirical confirmation study would conclude
- C) companies didn't benefit until later → implies a delay not suggested by the passage