The effect of total factor productivity on mobilization of financial resources in the stock market of Iran

The goal of investing and participating in the stock market and other markets is usually to achieve expected returns. Improving the total factor productivity leads to increased competitiveness, which contributes to the expansion of the market for the products of bourse companies both at home and abroad; the profitability of those companies is, thus, increased. As a result, the improvement of returns will increase the incentive for investors to direct their resources to bourse companies. Also, increasing the total factor productivity leads to an increase in the expected returns of bourse companies which, in turn, leads to increased demand for investment in the stock market. The aim of this study is to investigate the effect of total factor productivity on the mobilization of financial resources in Iran’s stock market. For this purpose, quarterly data of the 1993-2015 period and Ordinary Least Squares are used. The results of the research show that total factor productivity has a positive and significant effect on the mobilization of the financial resources in the stock market. Similarly, other variables such as stock market liquidity, saving rate and the dummy variable of approval procedures for the online trading of securities have positive and significant effects on the mobilization of financial resources. However, the economic risk and return of rival markets have a negative and significant effect in this regard.