WiseEuropa has been carrying out The Capital Market 25+ Research Program, which aims at examining and improving the state of the capital market in Poland. The Program is co-chaired by WiseEuropa Chief Economist Maciej Bitner and WiseEuropa President Maciej Bukowski.
The recommendations regarding its further development became especially pertinent in the context of 25 years of the Poland’s economic transition. 4 main goals of the program are:
- Searching for and critically analyzing theoretical and empirical evidence on the relationship between capital markets development and economic growth in Poland and in the world.
- Identifying key factors responsible for the development of local capital markets.
- Preparing a list of barriers preventing the development of capital markets and analyzing their presence in Poland.
- Looking for feasible local solutions for each barrier for the capital market development in Poland.
The research idea behind the Program is rooted in an earlier interests of its initiators. Maciej Bitner and Maciej Bukowskiactively took part in public debates on the pension reforms of 2011 and 2013. The negative impact of the changes on the Polish capital market was clear for most of economists, but only those discussions have shown how fragile the status of the market has really been during the transition period after 1989.
In 2013 the role of capital market in facilitating investments and innovation was openly questioned by many politicians and some economists, who took part in the debate. Furthermore, the pro-market side’ responses were not always coherent and didn’t reach the public opinion. Home country-based and accessible analysis showing that a developed capital market plays an important part in a prosperous society was clearly needed to address the above-described research gap.
The second impulse that ultimately led to the creation of the program was a result of the research on the Threat of the Middle Income Trap for Poland. The analysis, conducted in 2015 on behalf of (then) the Ministry of Labor (and therefore published in a volume Employment in Poland 2014), has shown that, among other barriers for the development of the Polish economy in the forthcoming decades, the lack of fully developed capital market could be a serious challenge. As the productivity of the Polish economy converges to the technological frontier, Polish companies need to innovate more for the economy to stay on its current high growth path.
Since the establishment of the Warsaw Stock Exchange (WSE) in 1991 the obvious candidate for taking up the role of such a hub for domestic risky capital was WSE and its ecosystem consisting of WSE subsidiaries, market-makers, investment funds, brokerage houses and other institutions. However, after two successful decades of development fueled by a institutional set-up that was undergoing dynamic restructuration, the privatization of significant part of the state-owned entities, pension system reforms in 1999 and the accession to the European Union, the Polish capital market has lost its growth momentum. Since 2011 the most important indicators that show the condition of the market have deteriorated (see Figure 1 and Figure 2) and as of yet there are no clear prospects of their improvement. As the demand for innovative risky capital is expected to increase due to the Poland’s struggle to change its largely imitative growth model, the WSE is paradoxically less likely to come forward to meet this funding demand.
