Using data on 49 countries from 1976 to 1993, the authors investigate whether measures of stock market liquidity, size, volatility, and integration in world capital markets predict future rates of economic growth, capital accumulation, productivity improvements, and private savings. They find that stock market liquidity-as measured by stock trading relative to the size of the market and economy - is positively and significantly correlated with current and future rates of economic growth, capital accumulation, productivity growth, even after controlling for economic and political factors. Stock market size, volatility, and integration are not robustly linked with growth. Nor are financial indicators closely associated with private savings rates. Significantly, banking development -as measured by bank loans to private enterprises divided by GDP -when combined with stock market liquidity predicts future rates of growth, capital accumulation, and productivity growth when entered together in regressions. The authors determine that these results are consistent with views that (1)financial markets and institutions provide important services for long-run growth, and (2)stock markets and banks provide different financial services.
Details
-
Author
Levine, Ross Zervos, Sara
-
Document Date
1996/12/31
-
Document Type
Policy Research Working Paper
-
Report Number
WPS1690
-
Volume No
1
-
Total Volume(s)
4
-
Disclosure Date
2010/07/01
-
Doc Name
Stock markets, banks, and economic growth
-
Keywords
Stock markets; Capital markets; Banks; Economic growth; Financial services; Financial institutions; International liquidity; Economic indicators; Productivity; Savings; Private enterprises; Regression analysis
- See More
Downloads
COMPLETE REPORT
Official version of document (may contain signatures, etc)
- Official PDF
- TXT*
- Total Downloads** :
- Download Stats
-
*The text version is uncorrected OCR text and is included solely to benefit users with slow connectivity.
Citation
Levine, Ross Zervos, Sara
Stock markets, banks, and economic growth (English). Policy, Research working paper ; no. WPS 1690 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/713021468766833662/Stock-markets-banks-and-economic-growth