The Impact of Capital Market Players' Exit, Voice and Loyalty on Economic Growth

In analyses of the global money and capital markets, economic discourse is mostly focussed on the movement and flow of capital, giving less emphasis to its role in influencing the formation of institutional frameworks as well as national and international rules, particularly in terms of the impact on economic growth. Based on the concept of exit, voice and loyalty developed by albert O. Hirschman, this paper examines the effect of capital movement and investors' voice on economic growth, making use of both macroeconomic tools and linear regression based on the data of European countries and Post-Soviet states. Our results indicate that the de facto exit of capital has a negative effect on economic growth, while the de jure exit of capital to the shadow economy and investors' voice result in a higher growth rate.