Endogenous growth and the emergence of equity finance

• 成果类型: Article
• 署名作者: Bose, N
• 署名单位: University of Wisconsin System; University of Wisconsin Milwaukee; University of Manchester
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2004.03.005
• 发表日期: 2005
• 页码: 173-188
• 关键词: equity finance; Stock market; real economic activity

摘要

This paper characterises the development of equity markets as a dynamic process that both influences and is influenced by the development of the real sector of the economy. In overlapping generations, economy borrowers seek funds to run risky investment projects by drawing up contracts which may take the form of either equity or debt issue. In the presence of information asymmetry between borrowers and lenders, the optimal contract is determined by trading off information dilution costs against bankruptcy costs. Significantly, the equilibrium choice of contract depends on the state of the economy which, in turn, depends on the contracting regime. Based on this analysis, the paper provides a theory of the joint determination of real and financial development with the ability to explain the emergence of a stock market along the path of real development. (c) 2004 Elsevier B.V. All rights reserved.