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Macroeconomic Determinants of Stock Market Development

  • Valeriano F. García

    (World Bank)

  • Lin Liu

    (University of Kentucky)

Registered author(s):

    Using pooled data from fifteen industrial and developing countries from 1980 to 1995, this paper examines the macroeconomic determinants of stock market development, particularly market capitalization. The paper finds that: (1) real income, saving rate, financial intermediary development, and stock market liquidity are important determinants of stock market capitalization; (2) macroeconomic volatility does not prove significant; and (3) stock market development and financial intermediary development are complements instead of substitutes.

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    File URL: http://www.cema.edu.ar/publicaciones/download/volume2/garcia_liu.pdf
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    Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

    Volume (Year): II (1999)
    Issue (Month): (May)
    Pages: 29-59

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    Handle: RePEc:cem:jaecon:v:2:y:1999:n:1:p:29-59
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    1. Demirguc-Kunt, Asli & Levine, Ross, 1995. "Stock market development and financial intermediaries : stylized facts," Policy Research Working Paper Series 1462, The World Bank.
    2. Singh, Ajit, 1996. "Financial liberalisation,stockmarkets and economic development," MPRA Paper 53897, University Library of Munich, Germany.
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    8. Atje, Raymond & Jovanovic, Boyan, 1993. "Stock markets and development," European Economic Review, Elsevier, vol. 37(2-3), pages 632-640, April.
    9. Pagano, Marco, 1993. "Financial markets and growth: An overview," European Economic Review, Elsevier, vol. 37(2-3), pages 613-622, April.
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    11. John H. Boyd & Bruce D. Smith, 1996. "The co-evolution of the real and financial sectors in the growth process," Working Papers 541, Federal Reserve Bank of Minneapolis.
    12. King, Robert G & Levine, Ross, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 717-37, August.
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    14. Bencivenga, Valerie R & Smith, Bruce D & Starr, Ross M, 1996. "Equity Markets, Transactions Costs, and Capital Accumulation: An Illustration," World Bank Economic Review, World Bank Group, vol. 10(2), pages 241-65, May.
    15. Michael B. Devereux & Gregor W. Smith, 1991. "International Risk Sharing and Economic Growth," Working Papers 829, Queen's University, Department of Economics.
    16. Levine, Ross & Zervos, Sara, 1996. "Stock Market Development and Long-Run Growth," World Bank Economic Review, World Bank Group, vol. 10(2), pages 323-39, May.
    17. Obstfeld, Maurice, 1992. "Risk-Taking, Global Diversification, and Growth," CEPR Discussion Papers 688, C.E.P.R. Discussion Papers.
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