Working Paper

Does financial market development stimulate savings? Evidence from emerging market stock markets


Abstract: This paper examines the empirical relation between financial market development, as measured by the stock market, and gross private savings rates in 16 emerging markets over 1982-1993. With data from all 16 countries, there is evidence of a significant positive relation between savings and stock market size and liquidity. When countries with outlying values for the stock market measures are excluded, however, all significance disappears. The results suggest that we should not assume that a growing or deepening stock market will necessarily be associated with higher savings rates.

Keywords: Saving and investment; Stock market; Financial markets;

Authors

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Research Working Paper

Publication Date: 1996

Number: 96-09