The Determinants of Stock Market Development in Emerging Economies: Is South Africa Different?

February 1, 2008

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Format: Chicago

Charles Amo Yartey. The Determinants of Stock Market Development in Emerging Economies: Is South Africa Different?, (USA: International Monetary Fund, 2008) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the institutional and macroeconomic determinants of stock market development using a panel data of 42 emerging economies for the period 1990 to 2004. The paper finds that macroeconomic factors such as income level, gross domestic investment, banking sector development, private capital flows, and stock market liquidity are important determinants of stock market development in emerging market countries. The results also show that political risk, law and order, and bureaucratic quality are important determinants of stock market development because they enhance the viability of external finance. This result suggests that the resolution of political risk can be an important factor in the development of emerging stock markets. The analysis also shows the factors identified above as determining stock market development in emerging economies can also explain the development of the stock market in South Africa.

Subject: Bank credit, Commercial banks, Emerging and frontier financial markets, Market capitalization, Stock markets

Keywords: Composite index, Rate of return, Stock market liquidity, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/032
Stock No:

WPIEA2008032
ISBN:

9781451868944
ISSN:

1018-5941

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