توسعه بازار سهام و رشد اقتصادی در بلژیک

This paper investigates the long-term relationship between financial market development and economic development in Belgium. We use a new data set of stock market development indicators to argue that financial market development substantially affected economic growth. We find strong evidence that stock market development caused economic growth in Belgium, especially in the period between 1873 and 1935. Institutional changes affecting the stock exchange explain the time-varying nature of the link between stock market development and economic growth.

The deepening and level of sophistication of modern financial markets is arguably a recent phenomenon. However, stock markets have long played an important role in economic life. DeClercq (1992) describes the early history of the financial system in Belgium, starting in the 14th century. This paper studies the importance of the Brussels stock market for fostering economic growth in the 19th and 20th centuries. Hicks (1969) argues that in the 19th century, for the first time in history, many private investment projects were so large that they could no longer be financed by individuals or from retained profits. The technological inventions of the industrial revolution, such as steam engine, had been made before, but their implementation had to wait for well-developed financial markets. The industrial society required an adapted financial system where publicly traded companies could get long-term financing.1 Against this background, the Brussels stock exchange opened in 1801 under the Napoleonic occupation (1795–1815). It was the beginning of a period of rapid industrialization.2 The spinning jenny was smuggled from England in 1799 and Cockerill imported the new techniques for the iron and steel industry in 1807. The Dutch government of William I (1815–1830) further revived the entrepreneurial spirit in Belgium. Our analysis starts at the beginning of the independence of Belgium in 1830. It focusses on the development and deepening of the Brussels stock exchange and on its growth-promoting role in the next 170 years. Linking historical evidence to the role of the stock exchange for economic growth requires a theoretical framework. We draw on the functional approach of Levine (1997). Financial markets allow for more efficient financing of private and public investment projects. By representing ownership of large-value, indivisible physical assets by easily tradeable and divisible financial assets, and making trade in them more liquid, they promote the efficient allocation of capital. They give lenders the opportunity to diversify their investments. In these roles, financial markets increase the quality and quantity of intermediated funds. Using descriptive historical evidence, we describe how the Brussels’ stock exchange fulfilled these roles. Our main contribution is to quantitatively assess the role of finance for growth in Belgium post 1830. Using a new data set on indicators of stock market development of the Brussels’ stock exchange, we find evidence that financial development significantly contributed to economic growth. Using cointegration analysis, we argue that the rapid expansion of industrial production was not only substantially facilitated, but even driven, by the financial development. Our econometric analysis finds evidence of an important long-term relationship between stock market development and economic growth in Belgium, especially in the period of rapid industrialization. The legal liberalization of the stock market in 1867–1873 increased the importance of the stock market. A reversal to more oppressive legislation in 1935 led to the opposite. We not only link the importance of the stock market to economic growth over time, we also interpret it in relationship to the universal banking system. We find that the banking system was more important for economic growth before 1873 than after 1873, when the stock market took over this role. The remainder of the paper is organized as follows. In Section 2, we review the theoretical finance–growth nexus, with an emphasis on the role of the stock market. Section 3 places our paper in the large empirical literature that has linked financial development to economic growth. In Section 4, we describe our data set. Section 5 documents the historical context and the legislative character governing the stock exchange. The main results on the quantitative link between stock market development and economic growth are in Section 6. Section 7 concludes.

Large production factors require the permanent commitment of an unprecedented quantity of capital. The stock market facilitates raising this capital. This paper has presented both descriptive and quantitative evidence that financial development and in particular the availability of stock market-based financing for firms was an important determinant of economic growth in Belgium. The strongest effects are found in the post-1873 period. The removal of the restrictions on the formation of limited liability companies, the removal of the restrictions on trade in the shares of these firms on the stock exchange, and the improved liquidity of trade around 1870 provided the final impetus for an accelerated development of the Brussels stock exchange. A cointegration analysis shows that the strongest evidence for the growth-promoting role of the stock market is in this period. Also, we find that stock market development was a better forecaster of economic growth than bank-based development. Based on descriptive historical evidence, we have argued that universal banks played an important role for economic growth pre-1873, not only by directly financing entrepreneurial activity, but also by fostering the initial development of the stock exchange. Gurley and Shaw, 1955 complain about the inadvertent undervaluation by economists of the role that finance plays in determining the pace and pattern of growth. We have presented historical and econometric evidence that the stock market played an important role in the economic development of Belgium. In additional results, not reported in the paper, we controlled for other growth-inducing variables put forward in the literature, and found the results to be robust. Nevertheless, caution remains: mono-causal explanations underestimate conflicting tendencies and the complexity of history. In recognition, we carefully examined the institutional changes and found that they lined up with the econometric changes in the relationship between the stock market development and economic growth.