The Evolution of Debt and Equity Markets in Economic Development

Posted: 18 Nov 1998

See all articles by John H. Boyd

John H. Boyd

University of Minnesota - Twin Cities - Carlson School of Management

Bruce D. Smith

University of Texas at Austin (Deceased)

Abstract

As noted by Gurley and Shaw, 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.

JEL Classification: E13, E44, E50, G20, O16

Suggested Citation

Boyd, John H. and Smith, Bruce D., The Evolution of Debt and Equity Markets in Economic Development. Available at SSRN: https://ssrn.com/abstract=137415

John H. Boyd (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States
612-624-1834 (Phone)

Bruce D. Smith

University of Texas at Austin (Deceased)

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