Stock markets and economic development: the case for regional exchanges
by Robert Huggins; Daniel Prokop
International Journal of Innovation and Regional Development (IJIRD), Vol. 5, No. 3, 2013

Abstract: While processes of globalisation are resulting in the convergence and centralisation of many financial mechanisms and markets, there is little evidence that such centralisation is of benefit to the economic development of regions that remain relatively peripheral to the geographic core of these markets. Within a UK context, the major equity market - the London Stock Exchange - is dominated by international firms or firms headquartered in the wider south-eastern belt, rather than firms more evenly spread across the UK. The aim of this paper is to undertake an analysis of the potential for establishing and-or stimulating regional forms of stock markets. Taking Wales as a case study region, the paper draws on a range of quantitative and qualitative data, and finds that the region is currently under-served by existing capital markets, resulting in a funding gap, especially for growth firms. It is further found that there is a significant cohort of firms in Wales that recognise the potential benefits of capital investment, especially through equity, but do not develop these finance routes due to a range of perceived or real hurdles. It is concluded that there is a valid case for policymakers to scope the strategic and operational requirements for establishing regional stock markets.

Online publication date: Wed, 02-Jul-2014

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