Finance-led growth? The role of the stock market in Swedish industrialization, 1863-1938

Description

This project concerns the literature on the correlation between economic growth and financial development. Recent research suggests that stock market financing may have been equally, or even more significant than bank credit during the European industrialization phase of the late 19th and early 20th century (van Nieuwerburgh et al., 2006; Lehmann-Hasemeyer & Streb, 2016).

The purpose of this project is to examine the contribution of the Swedish stock market to the growth of GDP between 1863 and 1938. Throughout this period, Swedish agriculture and industry underwent notable transformations and became more dependent on access to credit, which elevated the importance of the financial system (Schön, 2002). The literature has extensively examined this process from various perspectives. However, the importance of the pre-WWII stock market for Swedish industrialization has not been thoroughly investigated. Through the utilization of current methods and trade and price data from the Stockholm Stock Exchange (SSE), which have recently become available, our aim is to make a contribution to the international research on the relationship between financial development and economic growth.

Our goal is to provide a comprehensive picture of the growth and significance of financial markets in Sweden during this crucial period of its economic history.
The project consists of three interconnected parts. The first part of the project examines the contribution of the stock market to GDP growth, while the second part analyses the development of stock market efficiency. The third part focuses on the impact of financial market regulation on the SSE.