Capital Market Imperfection and Economic Growth
AbstractThis paper explains adverse international capital flows and economic growth using a model with asymmetric information in the capital market. The capital markets in developing countries are found to suffer more severely from asymmetric information than those in developed ones, which results in a lower rate of return on investment and severer credit rationing. Thus, capital flows from developing to developed countries, lowering the growth rate of the developing countries.
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Bibliographic InfoPaper provided by Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University in its series Discussion Paper with number 105.
Length: 27 p.
Date of creation: Aug 2002
Date of revision:
economic growth; capital flows; asymmetric information; credit rationing; development;
Find related papers by JEL classification:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- von Thadden, Ernst-Ludwig, 1995. "Long-Term Contracts, Short-Term Investment and Monitoring," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 557-75, October.
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