Andriansyah, Andriansyah and Messinis, George (2014) Equity markets and economic development: does the primary market matter? Economic Record, 90 (Supp.1). pp. 127-141. ISSN 0013-0249 (print) 1475-4932 (online)

Abstract

This article examines the role played by primary and secondary equity markets in economic gr owth. It departs from standard literature to integrate both mar kets and to 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.

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