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.
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