Abstract
Institutions, microeconomic factors and stock market capitalization: Evidence from the EAP countries
Highlights
Previous studies on factors affecting stock market capitalization have been carried out separately under two groups of factors: institutional and macroeconomic factors
The results indicate that that institutions, economic growth and savings had positive effects, macroeconomic factors such as inflation and high interest rates had a negative impact on stock capitalization in East Asian and Pacific countries (EAP) countries
How did institutions and / or macroeconomic factors affect stock market capitalization in this region? Based on the research of Yartey (2010), this paper examines the influence of institutions and macroeconomic factors on stock market capitalization in EAP countries in the period from 2008 to 2018
Summary
Previous studies on factors affecting stock market capitalization have been carried out separately under two groups of factors: institutional and macroeconomic factors. Research on institutions affecting the stock market was mainly exploited in a country like Greece by Asteriou and Siriopoulos (2000), in Asia by Gani and Ngassam (2008), and globally by Hooper et al (2009). The findings of these studies all confirm the important role of institutions in the development of the stock market. Institutional weakness such as political instability (Asteriou & Siriopoulos, 2000), corruption (Bolgorian, 2011), and ineffective government governance (Gani & Ngassam, 2008) negatively impact on the development of the stock market. Previous macroeconomic factors affecting stock markets have mainly focused on industrialized countries (Garcia & Liu, 1999), ASEAN countries (Wongbangpo & Sharma, 2002), and other countries in the Middle East and Central
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