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Does Financial Market Development Stimulate Savings? Evidence From Emerging Market Stock MarketsCatherine Bonser-Neal |
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. JEL code: E21; O16 Keywords: Savings, emerging markets, financial market development Catherine Bonser-Neal is an associate professor at Indiana University School of Business and a former economist at the Federal Reserve Bank of Kansas City. Kathryn L. Dewenter is an assistant professor at the University of Washington. The authors thank Peter Frost, Craig Hakkio, Alan Hess, Vance Roley, and seminar participants at the Federal Reserve Bank of Kansas City for helpful comments and suggestions. The views expressed by the authors do not necessarily reflect the views of the Federal Reserve Bank of Kansas City or the Federal Reserve System. Bonser-Neal E-mail: cneal@indyvax.iupi.edu. Dewenter E-mail: dewe@u.washington.edu.Back to top RWP home |