Financing Firm Growth The Role of Capital Markets in Low- and Middle-Income Countries © 2026 The World Bank Group,

https://www.ifc.org/en/insights-reports/2025/financing-firm-growth New research highlights how equity and bond markets foster growth in developing economies, contributing $4 trillion in capital and generating 5 percent more jobs over three decades. Deeper capital markets channel more investment toward productive firms, helping them expand and fueling development. https://openknowledge.worldbank.org/entities/publication/d109c573-99a2-4215-9561-ced423fcb60c Abstract Well-functioning capital markets can foster economic growth and allocate resources efficiently. Firms can tap into a broader funding base by issuing debt and equity in capital markets, often at cheaper rates and longer tenors than through other sources of external finance, such as banks. However, capital markets in low- and middle-income countries have lagged those in high-income countries. Accordingly, the firms in those countries have more often relied on bank financing or retained earnings to fund investment and expansion, and they have experienced greater financial constraints than their counterparts in high-income countries. © 2026 The World Bank Group,