DP2766 Financial Development and the Sensitivity of Stock Markets to External Influences
|Author(s):||Harris Dellas, Martin Hess|
|Publication Date:||April 2001|
|Keyword(s):||External Influences, Financial Development, Stock Markets|
|JEL(s):||F40, G10, O10|
|Programme Areas:||International Macroeconomics, Financial Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=2766|
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.