Testing the three roles of equity markets in developing countries: The case of China

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17 Citations (Scopus)


The role of equity markets in economic development has been increasingly recognized in recent years. Yet few studies have analyzed the transmission mechanisms between them. This paper looks at this missing agenda by indirectly assessing whether the equity markets fulfill the following roles: (a) financing firms' investment; (b) improving firms' corporate governance and, hence, performance; and (c) signaling information regarding issuers to public investors through stock prices--all of which are essential in achieving economic growth for developing countries. This paper assesses the development stages of China's equity markets by testing whether the above three roles are fulfilled.

Original languageEnglish
Pages (from-to)1467-1486
Number of pages20
JournalWorld Development
Issue number9
Publication statusPublished - 2004 Sept


  • China
  • Corporate governance
  • Developing countries
  • Equity market
  • Investment
  • Stock prices

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Sociology and Political Science
  • Economics and Econometrics


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