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Discussion Paper Details

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Title: Financial Development and the Sensitivity of Stock Markets to External Influences

Author(s): Harris Dellas and Martin Hess

Publication Date: April 2001

Keyword(s): External Influences, Financial Development and Stock Markets

Programme Area(s): Financial Economics and International Macroeconomics

Abstract: We investigate how the relative contribution of external factors to stock price movements varies with the degree of financial development. We find that financial development makes stock markets more susceptible to external influences (both financial and macroeconomic). Interestingly, this effect is present even after having accounted for capital controls and international trade effects.

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Bibliographic Reference

Dellas, H and Hess, M. 2001. 'Financial Development and the Sensitivity of Stock Markets to External Influences'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2766