Abstract
Stock market capitalization has been regarded as an important component of financial development of countries, as an instrument of economic growth. This study examines the effect of private credit, real income, inflation, foreign direct investment, financial openness, stock market liquidity, liquid liabilities, and domestic savings on stock market capitalization for 55 Eurasian countries between 1975 and 2017. I find that real income, stock market liquidity, foreign direct investment and financial openness have a positive effect, while inflation has a negative effect on stock market capitalization to GDP ratio. Other variables are found to be insignificant. I also examine pre-1990 and post-1990 periods due to political and structural changes in the region, however the results are robust to both periods.
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