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Capital Accumulation in Less Developed Countries: Does Stock Market Matter?

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  • Sarkar, Prabirjit

Abstract

Our panel data analysis (1988-2002) of a sample of 31 less developed countries (LDCs) shows that the stock market capitalization as a percentage of GDP- an important indicator of stock market development- has no relationship with the growth rates of gross fixed capital formation (GGKF). Our time series analysis (1976-2002) of 16 LDCs shows that in 11 cases there is no meaningful relationship between the stock market turnover ratio and the growth of capital accumulation (GGKF). For 5 LDCs (belonging to the so-called French-origin civil law category) with low shareholder protection we get a positive long-term relationship.

Suggested Citation

  • Sarkar, Prabirjit, 2007. "Capital Accumulation in Less Developed Countries: Does Stock Market Matter?," MPRA Paper 5053, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:5053
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    File URL: https://mpra.ub.uni-muenchen.de/5053/1/MPRA_paper_5053.pdf
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    References listed on IDEAS

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    Cited by:

    1. Misati, Roseline Nyakerario & Nyamongo, Esman Morekwa, 2011. "Financial development and private investment in Sub-Saharan Africa," Journal of Economics and Business, Elsevier, vol. 63(2), pages 139-151.
    2. Parmendra Sharma & Eduardo Roca, 2011. "Reâ Designing Financial Systems: A Review of the Role of Stock Markets in Developing Economies," Discussion Papers in Finance finance:201120, Griffith University, Department of Accounting, Finance and Economics.
    3. Misati, Roseline Nyakerario & Nyamongo, Esman Morekwa, 2011. "Financial development and private investment in Sub-Saharan Africa," Journal of Economics and Business, Elsevier, vol. 63(2), pages 139-151, March.

    More about this item

    Keywords

    stock market; capital accumulation; growth; and liberalisation;

    JEL classification:

    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • G00 - Financial Economics - - General - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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