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

Jadavpur University Working Paper No. 06-06

21 Pages Posted: 18 Dec 2006 Last revised: 25 Jan 2008

Prabirjit Sarkar

affiliation not provided to SSRN

Date Written: March 2006

Abstract

Our panel data analysis ) of a sample of 31 less developed countries) 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. Our time series analysis ) of 15 countries shows that in at least 10 cases we observe no positive long-run relationship between the stock market turnover ratio and the growth of capital accumulation. Interestingly the countries experiencing the developmental function of stock market are by and large civil law origin countries with alleged poor shareholder protection.

Keywords: stock market, capital accumulation, growth, and liberalisation

JEL Classification: O16 O50, O57 F36, G00

Suggested Citation

Sarkar, Prabirjit, Capital Accumulation in Less Developed Countries: Does Stock Market Matter? (March 2006). Jadavpur University Working Paper No. 06-06. Available at SSRN: https://ssrn.com/abstract=952154 or http://dx.doi.org/10.2139/ssrn.952154

Prabirjit Sarkar (Contact Author)

affiliation not provided to SSRN

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