Financial Development and the Sensitivity of Stock Markets to External Influences

Harris Dellas () and Martin Hess

No 2766, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate how the relative contribution of external factors to stock price movements varies with the degree of financial development. We find that financial development makes stock markets more susceptible to external influences (both financial and macroeconomic). Interestingly, this effect is present even after having accounted for capital controls and international trade effects.

Keywords: Financial development; Stock markets; External influences (search for similar items in EconPapers)
JEL-codes: F40 G10 O10 (search for similar items in EconPapers)
Date: 2001-04
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Journal Article: Financial Development and the Sensitivity of Stock Markets to External Influences (2002)
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