Discussion paper

DP3681 Financial Development and Stock Returns: A Cross-Country Analysis

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.

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Citation

Dellas, H and M Hess (2002), ‘DP3681 Financial Development and Stock Returns: A Cross-Country Analysis‘, CEPR Discussion Paper No. 3681. CEPR Press, Paris & London. https://cepr.org/publications/dp3681