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Measuring relative development level of stock markets: Capacity and effort of countries

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  • Nihal Bayraktar

Abstract

One of the important determinants of economic development is the existence of an effective financial system. Despite widespread need for financial services, the range and depth of financial markets, including stock markets, vary significantly across countries. One question in the literature is how to measure the development level of stock markets across countries for appropriate policy formations. This paper suggests capacity and effort measures of stock market capitalization, which consider country characteristics, as diagnostic tool to assess the gap between the actual level of stock market capitalization and the capacity of countries. It involves a panel study of 104 developing and developed countries for the period of 1990e2012. The analysis can deliver broad guidance for public reforms in countries with various levels of market capitalization. Cross-country comparisons with measures considering country characteristics can give a better idea on the state of financial systems. Consequently, countries can be more accurately categorized based on different problems such as unsustainable expansions or shallow financial markets.

Suggested Citation

  • Nihal Bayraktar, 2014. "Measuring relative development level of stock markets: Capacity and effort of countries," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 14(2), pages 74-95, June.
  • Handle: RePEc:bor:bistre:v:14:y:2014:i:2:p:74-95
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    Cited by:

    1. Tarek Eldomiaty & Marina Apaydin & Mona Yusuf & Mohamed Rashwan, 2023. "How Do Stock Market Development and Competitiveness Affect Equity Risk Premium? Implications from World Economies," IJFS, MDPI, vol. 11(1), pages 1-19, February.
    2. Siti Amalia & Dadang Lesmana & Yanzil Azizil Yudaruddin & Rizky Yudaruddin, 2022. "The Impact of Board Structure on Voluntary Environmental and Energy Disclosure in an Emerging Market," International Journal of Energy Economics and Policy, Econjournals, vol. 12(4), pages 430-438, July.
    3. MUYAMBIRI, Brian & ODHIAMBO, Nicholas M., 2017. "The Impact of Financial Development on Investment in Botswana: an ARDL-Bounds Testing Approach," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 70(2), pages 193-216.
    4. Chandrasekhar Krishnamurti & Domenico Pensiero & Eswaran Velayutham, 2019. "Determinants Of Defence Industry Corruption Risk: Firm Level Empirical Evidence Using Transparency International’S Anti-Corruption Index," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(03), pages 675-708, June.
    5. Koffi Elitcha, 2021. "The moderating role of stock markets in the bank competition-entrepreneurship relationship," Small Business Economics, Springer, vol. 56(4), pages 1333-1360, April.
    6. Cemil Kuzey & Ali Uyar & Amal Hamrouni & Merve Kilic & Rim Boussaada, 2021. "The link between institutional quality, ethical behaviors of firms, and market regulations on stock market developments," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 998-1021, June.
    7. Muhammad Ali Nasir & Muhammad Shahbaz & Trinh Thi Mai & Moade Shubita, 2021. "Development of Vietnamese stock market: Influence of domestic macroeconomic environment and regional markets," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 1435-1458, January.

    More about this item

    Keywords

    Stock market capitalization; Market capitalization capacity; Market capitalization effort;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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