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Financial development and stock returns: A cross country analysis

  • Harris Dellas
  • Martin K. Hess

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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Paper provided by Universitaet Bern, Departement Volkswirtschaft in its series Diskussionsschriften with number dp0218.

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Date of creation: Dec 2002
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Handle: RePEc:ube:dpvwib:dp0218
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