Financing minority economic development

A close analysis of the capital-asset pricing model’s assumptions and implications for efficient allocation of resources to investment in capital assets can form the basis for changes in the way capital markets are regulated by the federal government and in taxing policy of the government. In particular, our analysis indicates that the value of currently marketed assets can be increased by the inclusion in portfolios of currently nonmarketed assets.Moreover, the value of nonmarketed assets emerges as a significant instrumental variable for policy makers.The government can increase the value of all currently marketed assets by increasing positive changes in the value of nonmarketed assets.This might be accomplished by requiring by legislation or rule, for example, that a certain proportion of the listed securities on any exchange be comprised of the securities of black firms and other firms whose securities are not now marketed.The government might want, by tax incentive, to promote investment in firms with nonmarketed assets.It might want to increase the funding level of institutions such as MESBIC’S supplying equality finance to small black firms.