Capital Markets and Poverty Alleviation

Abstract

A maiden attempt is made in this paper by the authors to see the interrelationship between capital market with special reference to stock market and poverty alleviation in India. There is literature to highlight the point that poverty alleviation is possible only through various measures from social indicators like better education, best health facilities and so on. But not very many references on the role of capital market on poverty alleviation is available. Twenty-one year data set from 1981 to 2001 is considered in the study. These data were analysed through stepwise regression with other simple statistical tools like descriptive statistics and linear bivariate correlation. Six dimensional analyses are made with different assumptions. It is found that, size of the stock market represented by market capitalization ratio and concentration alone have influence on poverty and by concentrating on these two variables it is possible to achieve the goal of alleviating the poverty in India. Significantly in many of our assumptions stock market does not have impact on the poverty either negatively or positively. There was some evidence to say that stock market doesn't have role in poverty alleviation in an economy like India but that is not highlighted due to the fact that in some cases size and concentration of stock market have influenced. This is to be taken as a partial correlation between stock market and poverty with a caution that, there are many economic variables, which are to be simultaneously taken note of for reducing poverty.