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Financial Markets And The Allocation Of Capital

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  • Jeffrey Wurgler

Abstract

Financial markets appear to improve the allocation of capital--across 65 countries, those with developed financial markets increase investment more in growing industries, and decrease investment more in declining industries, than financially undeveloped countries. The efficiency of capital allocation is also negatively correlated with the extent of state ownership in the economy, and positively correlated with the degree of firm-specific movement

Suggested Citation

  • Jeffrey Wurgler, 1999. "Financial Markets And The Allocation Of Capital," Yale School of Management Working Papers ysm123, Yale School of Management, revised 01 Mar 2001.
  • Handle: RePEc:ysm:somwrk:ysm123
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    File URL: http://icfpub.som.yale.edu/publications/2498
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