Capital Market Development, Frequency of Recession, and Fraction of Time the Economy in Recession

Piyapas Tharavanij

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the effect of capital market development on the frequency of recession and the fraction of time the economy in recession using quarterly data of thirty-five countries from 1975 to 2004. The main finding is that frequency of recession is not robustly linked to measures of capital market development. However, the fraction of time the economy spends in recession is significantly related to capital market development. This implies that countries with more advanced capital market would tend to spend lower proportion of time in recession, though the marginal effect is small.

Keywords: business cycle; capital market; financial development; financial structure; panel data; market-based; bank-based (search for similar items in EconPapers)
JEL-codes: C33 C35 E32 E44 G00 G21 (search for similar items in EconPapers)
Date: 2007-09-09
New Economics Papers: this item is included in nep-mac
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https://mpra.ub.uni-muenchen.de/5190/1/MPRA_paper_5190.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:4954

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