Stock Markets, Growth, and Tax Policy
Abstract
An extensive literature documents the role of financial markets in economic development. To help explain this relationship, this paper constructs an endogenous growth model in which a stock market emerges to allocate risk and explores how the stock market alters investment incentives in ways that change steady state growth rates. The paper demonstrates that stock markets accelerate growth by (1) facilitating the ability to trade ownership of firms without disrupting the productive processes occurring within firms and (2) allowing agents to diversify portfolios. Tax policy affects growth directly by altering investment incentives and indirectly by changing the incentives underlying financial contracts.
Integrity signals
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Cites
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Claims the paper makes
Claims other papers make about this one
Each is checked against this paper’s own text: does it say what the citing paper says it does?
The emergence of equity markets or banks can reduce liquidity risk and spur economic growth.
“For example, Levine (1991) shows how the emergence of equity markets or banks can reduce liquidity risk and spur economic growth.”
From Finance, Growth, and Inequality (2021) · cites this paper as Levine (1991)
Cited by
Sorted by citations
Stock markets, banks, and growth: Panel evidence
Beck, T., & Levine, R. (2004) · Journal of Banking & Finance · doi:10.1016/s0378-4266(02)00408-9 · Cited by 2,067 · see citing works
Self-citationFinance, Growth, and Inequality
Levine, R. (2021) · IMF Working Papers · doi:10.5089/9781513583365.001 · Cited by 62 · see citing works
Self-citation
- Authors
- LEVINE, R.
- Affiliations
- World Bank (US)
- Corresponding author
- LEVINE, ROSS
- ORCID
- LEVINE, ROSS
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 1991-09
- Volume
- 46
- Issue
- 4
- Pages
- 1445-1465
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W2141703703
- Cited by
- 1,111
- References
- 0
- Citations by year
- 2026: 20 · 2025: 25 · 2024: 25 · 2023: 52 · 2022: 45 · 2021: 56 · 2020: 52 · 2019: 47 · 2018: 42 · 2017: 50 · 2016: 64 · 2015: 63 · 2014: 72 · 2013: 57 · 2012: 55
- FWCI
- 24.61
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The Journal of Finance (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Fiscal Policy and Economic Growth
- Keywords
- stock market, endogenous growth, risk allocation, investment incentives, steady-state growth, portfolio diversification, tax policy, financial contracts, ownership transfer, financial development
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
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