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Financial development and stock returns: A cross-country analysis

  • Dellas, Harris
  • Hess, Martin

We examine stock returns in a cross section of emerging and mature markets (49 countries) over 1980-99. Stock returns are found to be significantly related to the degree of financial development. In general, a deeper and higher quality banking system is associated with lower volatility of stock returns and a greater synchronization in the movements of domestic and world returns. International synchronization is also greater the more liquid the stock market.

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File URL: http://www.sciencedirect.com/science/article/B6V9S-4H27BT9-2/2/582b3f3420a6021827248b50ffca3429
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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 24 (2005)
Issue (Month): 6 (October)
Pages: 891-912

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Handle: RePEc:eee:jimfin:v:24:y:2005:i:6:p:891-912
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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