The evolution of debt and equity markets in economic development

Bruce Smith and John H. Boyd ()
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John H. Boyd: Finance Department, University of Minnesota, Minneapolis, MN 55455, USA

Economic Theory, 1998, vol. 12, issue 3, 519-560

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.

Keywords: Finance; ·; Growth; ·; Development. (search for similar items in EconPapers)
JEL-codes: E13 E44 E50 G20 O16 (search for similar items in EconPapers)
Date: 1998-10-13
Note: Received: December 30, 1997; revised version: May 26, 1998
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Citations: View citations in EconPapers (179)

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Working Paper: The evolution of debt and equity markets in economic development (1995)
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