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Macroeconomic Determinants of Stock Market Development

  • Valeriano F. García

    (World Bank)

  • Lin Liu

    (University of Kentucky)

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    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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    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. Maurice Obstfeld, 1992. "Risk-taking, global diversification, and growth," Discussion Paper / Institute for Empirical Macroeconomics 61, Federal Reserve Bank of Minneapolis.
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    17. 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.
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