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Capital Market Development, Frequency of Recession, and Fraction of Time the Economy in Recession

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  • Tharavanij, Piyapas

Abstract

This paper investigates the effect of capital market development on the frequency of recession and the fraction of time the economy in recession using quarterly data of thirty-five countries from 1975 to 2004. The main finding is that frequency of recession is not robustly linked to measures of capital market development. However, the fraction of time the economy spends in recession is significantly related to capital market development. This implies that countries with more advanced capital market would tend to spend lower proportion of time in recession, though the marginal effect is small.

Suggested Citation

  • Tharavanij, Piyapas, 2007. "Capital Market Development, Frequency of Recession, and Fraction of Time the Economy in Recession," MPRA Paper 4954, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:4954
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    File URL: https://mpra.ub.uni-muenchen.de/5190/1/MPRA_paper_5190.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    business cycle; capital market; financial development; financial structure; panel data; market-based; bank-based;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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