Allocational Efficiency


Allocational Efficiency
A characteristic of an efficient market in which capital is allocated in a way that benefits all participants. Allocational efficiency occurs when organizations in the public and private sectors can obtain funding for the projects that will be the most profitable, thereby promoting economic growth.

In order to be allocationally efficient, a market must meet the prerequisites of being both informationally efficient (where much is known by all), and transactionally or operationally efficient (where transaction costs are reasonable and fair). If all conditions are met, capital flows will direct themselves to the places where they will be the most effective, providing an optimal risk/reward scenario for investors.


Investment dictionary. . 2012.

Look at other dictionaries:

  • allocational efficiency — The effectiveness with which a market channels capital toward its most productive uses. Bloomberg Financial Dictionary …   Financial and business terms

  • Economic Efficiency — A broad term that implies an economic state in which every resource is optimally allocated to serve each person in the best way while minimizing waste and inefficiency. When an economy is economically efficient, any changes made to assist one… …   Investment dictionary

  • Sanford Grossman — Sanford Jay Grossman, auch Sandy Grossman genannt (* 21. Juli 1953 in Brooklyn, New York City), ist ein US amerikanischer Wirtschaftswissenschaftler und Finanzberater. Inhaltsverzeichnis 1 Leben und Wirken 2 Auszeichnungen 3 Mitgliedschaften …   Deutsch Wikipedia