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A Methodological Note on Measuring the Functional Efficiency of Capital Markets

Author

Listed:
  • Eklund, Johan E

    (JIBS and CESIS)

  • Desai, Sameeksha

    (Max Planck Institute of Economics)

Abstract

We apply the accelerator principle to measure the functional efficiency of capital markets. We estimate the elasticity of capital with respect to output using a panel of firms across 44 countries, and compare the results with existing approaches. Furthermore, we correlate our measure with corporate governance institutions.

Suggested Citation

  • Eklund, Johan E & Desai, Sameeksha, 2008. "A Methodological Note on Measuring the Functional Efficiency of Capital Markets," Working Paper Series in Economics and Institutions of Innovation 132, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    • Handle: RePEc:hhs:cesisp:0132
    as

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    References listed on IDEAS

    as
    1. Wurgler, Jeffrey, 2000. "Financial markets and the allocation of capital," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 187-214.
    2. Rafael La Porta & Florencio Lopez-de-Silanes & Cristian Pop-Eleches & Andrei Shleifer, 2004. "Judicial Checks and Balances," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 445-470, April.
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    4. Gugler, Klaus & Mueller, Dennis C & Yurtoglu, B Burcin, 2004. "Corporate Governance and the Returns on Investment," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 589-633, October.
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    6. Marco Pagano & Paolo F. Volpin, 2005. "The Political Economy of Corporate Governance," American Economic Review, American Economic Association, vol. 95(4), pages 1005-1030, September.
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    More about this item

    Keywords

    Allocation of capital; accelerator principle; functional efficiency;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General

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