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Do a secure business environment and a judicial system complement or substitute each other in spurring stock market development?

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  • Khalil Nimer
  • Ali Uyar
  • Ahmed Bani-Mustafa

Abstract

This study adopts an institutional perspective to explore the potential impact of different aspects, namely physical security and the legal environment, within the institutional environment on stock market development. It aims to provide insights and recommendations for policymakers on how to foster stock market development within their respective countries. The sample of the study consists of 764 country-year observations between 2007 and 2018 for 74 countries. The results of the system GMM methodology show that although a secure business environment per se fosters stock market development in some models, it does not exist in other models. However, a sound judicial system is a robust determinant of stock market development in all model specifications. Furthermore, the moderation effect revealed that these two aspects of the institutional environment are not complementary but substitutive. This implies that they may not co-exist; one might be sufficient to spur stock market.

Suggested Citation

  • Khalil Nimer & Ali Uyar & Ahmed Bani-Mustafa, 2025. "Do a secure business environment and a judicial system complement or substitute each other in spurring stock market development?," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 21(3/4), pages 719-742.
    • Handle: RePEc:ids:ijaape:v:21:y:2025:i:3/4:p:719-742
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