Abstract
This study examines the macroeconomic determinants of stock market development in Malaysia during the period 1981 to 2015. Specifically, it investigates the impact of banking sector development, economic performance, the inflation rate, foreign direct investment and trade openness on the development of the Malaysian stock market. The results show that economic performance and trade openness have positive and significant long-run impacts, whereas banking sector development has a negative and significant long-run impact on stock market development. In the short run, the results indicate that the previous periods of banking sector development, as well as current and previous periods of trade openness, have had positive impacts on stock market development. These findings have practical policy implications.
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