DP3681 Financial Development and Stock Returns: A Cross-Country Analysis
|Author(s):||Harris Dellas, Martin Hess|
|Publication Date:||January 2002|
|Keyword(s):||financial development, stock returns|
|Programme Areas:||International Macroeconomics, Financial Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=3681|
We examine stock returns in a cross section of emerging and mature markets (47countries) between 1980-99. The level of financial development turns out to be an important determinant of the performance of stock returns. In general, a deeper and higher quality banking system decreases the volatility of stock returns. It also contributes to a greater synchronization in the movements of domestic and world returns and the same obtains when the stock market is liquid.