A Note on the Role of Ldcs Security Markets in Savings Mobilization
Journal of Development Studies, Vol. V, pp. 41-50, 1983
Posted: 2 Mar 2006
A widespread debate among development economists and policy makers focuses on the issue whether setting up securities markets in less developed countries can and will increase their savings rates and, by this way, generate substantial economic benefits. The paper attempts to contribute to the debate. The investigation encompasses relationship between development of securities markets in a backward context and improvement of savings mobilization process, the latter conceived in terms both of increase of gross private savings rate and of enhancement of the efficiency in allocating capital resources. The results of the analysis suggest that the opportunities to expand aggregate savings by establishing securities markets depend on a variety of conditions and limiting factors related to each socio-economic context. Given that most of these constraints exist, such opportunities are to be assessed on a case-by-case basis. In conclusion, according to the Authors, it should not be assumed that the introduction of this innovation in the financial scene of a less developed country will necessarily and significantly improve savings mobilization process. Indeed, with particular reference to the early stages of development, it might be observed that the establishment of security markets it is likely to affect only modestly private savings rates and resource allocation.
Keywords: Savings Mobilization, Securities Markets, Household Savings
JEL Classification: E21, E44, O16
Suggested Citation: Suggested Citation