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The Development of Stock Markets: In Search of a Theory

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  • Kamal A. El-Wassal

    (Alexandria University, Egypt)

Abstract

This paper aims to provide a framework for the main determinants of stock market development. Assessing stock market development requires not only an understanding of its main determinants but also a clear definition of what stock market development means and how progress towards it can be measured. This paper reconsiders the concept of stock market development and suggests five dimensions for assessing it. In addition, it proposes four sets of factors that shape or determine stock market development: supply factors, demand factors, institutional factors and economic policies. While both supply factors and demand factors serve as building blocks of the stock market, institutional factors and economic policies serve as supporting blocks. The paper concludes by emphasizing three principles. First, stock market development is a difficult, complex, multi-faceted, and long-term process. Second, stock market development is only part of the overall development of a country's financial system. Third, stock market development is mainly a private sector activity.

Suggested Citation

  • 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.
    • Handle: RePEc:eco:journ1:2013-03-6
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    More about this item

    Keywords

    Stock Markets Development; Measurement of Stock Market Development; Demand for Stocks; Supply of Stocks; Institutional Factors;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G19 - Financial Economics - - General Financial Markets - - - Other

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