×

The evolution of debt and equity markets in economic development. (English) Zbl 0909.90019

Summary: As noted by Gurley and Shaw (1955), there is a typical pattern of economic development in which the evolution of the financial system is an essential aspect of the growth process. We focus on one component of this evolution: the increasing importance of equity markets as an economy grows. We develop a growth model where capital accumulation is financed externally through a combination of debt and equity. We illustrate why equity market activity might grow – often very rapidly – as an economy develops. We also illustrate why access to equity markets may not be needed in the early stages of economic development.

MSC:

91B28 Finance etc. (MSC2000)
91B62 Economic growth models
PDFBibTeX XMLCite
Full Text: DOI DOI