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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. Obstfeld, Maurice, 1992. "Risk-Taking, Global Diversification, and Growth," CEPR Discussion Papers 688, C.E.P.R. Discussion Papers.
    2. Atje, Raymond & Jovanovic, Boyan, 1993. "Stock markets and development," European Economic Review, Elsevier, vol. 37(2-3), pages 632-640, April.
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    4. 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.
    5. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
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    8. Michael B. Devereux & Gregor W. Smith, 1991. "International Risk Sharing and Economic Growth," Working Papers 829, Queen's University, Department of Economics.
    9. 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.
    10. Demirguc-Kunt, Ash & Levine, Ross, 1996. "Stock Markets, Corporate Finance, and Economic Growth: An Overview," World Bank Economic Review, World Bank Group, vol. 10(2), pages 223-39, May.
    11. Pagano, Marco, 1993. "Financial markets and growth: An overview," European Economic Review, Elsevier, vol. 37(2-3), pages 613-622, April.
    12. Singh, Ajit, 1997. "Financial Liberalisation, Stockmarkets and Economic Development," Economic Journal, Royal Economic Society, vol. 107(442), pages 771-82, May.
    13. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    14. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    15. Levine, Ross, 1991. " Stock Markets, Growth, and Tax Policy," Journal of Finance, American Finance Association, vol. 46(4), pages 1445-65, September.
    16. J. Bradford De Long & Andrei Shleifer & Lawrence H. Summers & Robert J. Waldmann, 1989. "The Size and Incidence of the Losses from Noise Trading," NBER Working Papers 2875, National Bureau of Economic Research, Inc.
    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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