Democracy and stock market performance in developing countries

Simplice Asongu

MPRA Paper from University Library of Munich, Germany

Abstract: This is paper is a natural extension of Yang (2011) where-in democracy is not positively related to stock market development. We postulate that when moment conditions of stock market performance are accounted for, democracy improves financial markets in developing countries. Channels of democracy, polity and autocracy are instrumented with legal-origins, religious-legacies, income-levels and press-freedom qualities. As a policy implication democracies have important effects on both the degree of competition for public office and the quality of public policies that favor stock market performance in developing countries.

Keywords: Financial Markets; Government Policy; Political Economy; Development (search for similar items in EconPapers)
JEL-codes: G10 G18 G28 P16 P43 (search for similar items in EconPapers)
Date: 2011-12-20
New Economics Papers: this item is included in nep-pol
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