Equity markets and economic development: Does the primary market matter?

Andriansyah, Andriansyah and Messinis, George (2014): Equity markets and economic development: Does the primary market matter? Published in: The Economic Record , Vol. June, No. 90 (2014): pp. 127-141.

Abstract

This article examines the role played by primary and secondary equity markets in economic growth. It departs from standard literature to integrate both markets and explicitly acknowledge the primary equity market. By employing a variety of dynamic panel estimators for 54 countries over the period 1995-2010, we show that the primary equity market is not an important determinant of economic growth, although it facilitates the development of the secondary market. This study also confirms the importance of liquidity provided by the secondary market. The evidence here calls for further investigation into the capital-raising function of equity markets.

• Item Type: MPRA Paper
• Language: English
• Keywords: Equity Markets, Primary Markets, Secondary Markets, Development
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; G - Financial Economics > G2 - Financial Institutions and Services > G23 - Non-bank Financial Institutions ; Financial Instruments ; Institutional Investors; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance

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