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Development of Financial Markets in Central Europe; the Case of the CE4 Countries

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  • Amat Adarov
  • Robert Tchaidze

Abstract

Financial markets in the CE4 countries are still shallow compared to other advanced EU countries. While the government bond markets are comparable in size, measured by capitalization in percent of GDP, the private bond, private credit, and equity markets lag behind. Empirical analysis in this paper helps identify factors that explain this phenomenon. We find that the observed differences cannot be explained by macroeconomic variables only, but incorporating indicators of institutional development and external funding eliminates the gap in the case of the equity and private credit markets. However, for the private bond market a significant gap remains even after accounting for these factors.

Suggested Citation

  • Amat Adarov & Robert Tchaidze, 2011. "Development of Financial Markets in Central Europe; the Case of the CE4 Countries," IMF Working Papers 11/101, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:11/101
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    Cited by:

    1. Kamal A. El-Wassal, 2013. "The Development of Stock Markets: In Search of a Theory," International Journal of Economics and Financial Issues, Econjournals, vol. 3(3), pages 606-624.
    2. Perugini, Cristiano & Hölscher, Jens & Collie, Simon, 2013. "Inequality, credit expansion and financial crises," MPRA Paper 51336, University Library of Munich, Germany.
    3. Calixte Ahokpossi & Kareem Ismail & Sudipto Karmakar & Mesmin Koulet-Vickot, 2013. "Financial Depth in the WAEMU; Benchmarking Against Frontier SSA Countries," IMF Working Papers 13/161, International Monetary Fund.
    4. Azis, Iwan J., 2013. "Inadequate Regional Financial Safety Nets Reflect Complacency," ADBI Working Papers 411, Asian Development Bank Institute.
    5. Iwan J. Azis, 2012. "Asian Regional Financial Safety Nets? Don't Hold Your Breath," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 8(3), pages 321-340, August.
    6. Svetlana Biloocaia, 2016. "The Main Aspects of Implementing the Accumulation Function by the Financial Markets of European Countries," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 320-326.
    7. Wolf, Holger, 2011. "Relationship-based and arms-length financial systems -- a European perspective," Policy Research Working Paper Series 5833, The World Bank.

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