What drives stock market development in emerging markets—institutions,remittances, or natural resources? |
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Authors: | Andreas Billmeier Isabella Massa |
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Institution: | 1. International Monetary Fund, 700 19th Street, NW, Washington, DC 20431, United States;2. Università Ca'' Foscari, Dorsoduro 3246, 30123 Venezia, Italy |
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Abstract: | In this paper, we assess the macroeconomic determinants of stock market capitalization in a panel of 17 emerging markets in the Middle East and Central Asia, including both hydrocarbon-rich countries and economies without sizeable natural resource wealth. In addition to traditional variables, we include an institutional variable and remittances among the regressors. We find that (i) both institutions and remittances have a positive and significant impact on market capitalization; and (ii) both regressors matter, especially in countries without significant hydrocarbon sectors; whereas (iii) in resource-rich countries, stock market capitalization is mainly driven by the oil price. |
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