Are Small Stock Markets Different?

15 Pages Posted: 12 Dec 2000

Multiple version iconThere are 2 versions of this paper

Date Written: November 2000

Abstract

Recent literature has established a positive correlation between financial development and economic growth. While papers such as Bencivenga, Smith and Starr (1995) identify potential nonlinearities in this relationship, empirical research to date has allowed for only linear relationships. This paper uses regression tree techniques to investigate whether the partial correlation between economic growth and financial development differs based on countries' levels of financial and economic development. As in previous studies, the relationship between growth and financial development is positively correlated in countries with high levels of market capitalization; however, this relationship does not appear to hold for countries with low levels of market capitalization. This is consistent with nonlinearities of the type in Bencivenga et al. (1995).

Keywords: Stock markets, economic growth, regression tree

JEL Classification: O40, O16

Suggested Citation

Minier, Jenny, Are Small Stock Markets Different? (November 2000). Available at SSRN: https://ssrn.com/abstract=250473 or http://dx.doi.org/10.2139/ssrn.250473

Jenny Minier (Contact Author)

Miami University ( email )

Department of Statistics
311 Upham Hall100 Bishop Circle
Oxford, OH 45056
United States