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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 (47countries) between 1980-99. The level of financial development turns out to be an important determinant of the performance of stock returns. In general, a deeper and higher quality banking system decreases the volatility of stock returns. It also contributes to a greater synchronization in the movements of domestic and world returns and the same obtains when the stock market is liquid.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3681.

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Date of creation: Jan 2002
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Handle: RePEc:cpr:ceprdp:3681
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