Capital Formation

A term in macroeconomics to refer to the transfer of savings to productive endeavours of setting up of financial institutions, private enterprises, fiscal measures, lending activites, development of capital markets, and the development of secondary markets for financial assets. Efficient capital formation is the end goal of capitalism and is a property that developed economies have.


  1. Janeway, William H. Doing capitalism in the innovation economy: Markets, speculation and the state. Cambridge University Press, 2012.
  2. Fama, Eugene F. "Efficient capital markets: A review of theory and empirical work." The journal of Finance 25, no. 2 (1970): 383-417.
  3. Fama, Eugene F., and Kenneth R. French. "Size, value, and momentum in international stock returns." Journal of financial economics 105, no. 3 (2012): 457-472.