The Stock Market and Economic Growth: An Analysis Based on Asymmetric Information

doi:10.16382/j.cnki.1000-5579.2007.04.022

Abstract

Abstract:

This paper makes an analysis of the relationship between stock market activity and long-run economic growth relying on endogenous changes in the information structure of capital market.Because of existence of asymmetric information, borrowers and lenders must resolve problems of enforcement through an appropriate design of financial contracts.The equilibrium choice of contract depends on the state of economy which, in turn, depends on the contracting regime.The stock market development in China has contributed to its economic growth.Therefore it makes sense for Chinese government to enlarge roles of the stock market in China's overall financial system.

Key words: asymmetric information, financial contract, economic growth, stock market development

CLC Number:

F830

Xue-jun FAN. The Stock Market and Economic Growth: An Analysis Based on Asymmetric Information[J]. Journal of East China Normal University (Philosophy and Social Sciences), 2007, 39(4): 119-124.

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