Based on measurement of stock market volatility for the period 1935 to 1992, Malay K Roy and Madhusudan Karmakar focus on two key issues : a) What is the average level of volatility and whether it has increased in the current period; b) Whether the present trend of share price movement is likely to impair the development process of our economy.

Although take‐overs are becoming important means of diversification, there is no established technique which incorporates uncertainties involved and gives a range of values of a target firm which can form the basis for offering a price. Using a model of the firm's cash flows after acquisition, Malay Kanti Roy simulates the likely cash flow streams from the acquisition of India Cements for various values of the key variables such as growth rate and earnings before interest and taxes. He shows how such models and simulation analyses can help negotiators set upper and lower limits for a take-over bid.

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Equity markets of many Asian countries are suffering from the menace of over• speculation and excessive price fluctuation in the post liberalisation period. The phenomenon contradicts the assumption of financial liberalisation hypothesis that predicts a decrease in volatility following liberalisation and discounts its macroeconomic effect. If the present unrulybehaviour of markets continues, it might lead to &equent fi:nancial crisis and misalloc:ation of savings and invesbnent to the detriment of real sector growth and stability. Policy makers must work out a plan to stop this menace, otherwise capital market would simply benefit unscrupulous speculators at the cost of the economy at large.

The present study has two-pronged objectives. First, to construct, through the Principal Component Analysis, an index for measuring the stock markets development for twenty-two sample countries and second, using the time series analysis, the form of relationship has been examined for the banking sector and stock markets to the economic growth of each country. The findings of the study exhibit substantial variation across countries even when the same variables and estimation methods have been used and hardly there exists any general consensus about the leading role of finance to the economic growth of a country.