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Development of Financial Markets in Central Europe

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  • Amat Adarov
  • Robert Tchaidze
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    Abstract

    Financial markets in the CE4 countries are still shallow compared to other advanced EU countries. While the government bond markets are comparable in size, measured by capitalization in percent of GDP, the private bond, private credit, and equity markets lag behind. Empirical analysis in this paper helps identify factors that explain this phenomenon. We find that the observed differences cannot be explained by macroeconomic variables only, but incorporating indicators of institutional development and external funding eliminates the gap in the case of the equity and private credit markets. However, for the private bond market a significant gap remains even after accounting for these factors.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/101.

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    Length: 33
    Date of creation: 01 May 2011
    Date of revision:
    Handle: RePEc:imf:imfwpa:11/101

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    Keywords: Access to capital markets; Financial sector; bond; bond market; private bond; financial markets; institutional development; public bond; stock market; portfolio investment; bond markets; corporate tax; stock markets; corporate tax rate; tax rate; financial intermediation; direct investment; financial economics; financial market; external financing; equity market; domestic capital markets; financial systems; credit markets; financial institutions; domestic capital; stock market development; contract enforcement; equity markets; bonds; domestic financial markets; financial market development; financial sector performance; government bond; financial services; financial liberalization; investor protection; bond market capitalization; institutional impediments; financial intermediary development; bond market development; domestic financial intermediation; deposit money banks; domestic investment; financial sector development; investors; private capital; mortgage bond market; crowding out; bond issuance; government bonds; stock exchanges; distribution of income; foreign direct investment; deposit money; trade credit; financial intermediaries; liquid markets; investment needs; corporate valuation; domestic capital market; mortgage bond; emerging stock markets; government bond markets; resident borrowers; financial derivatives; international financial statistics;

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