The Big Bang: Stock Market Capitalization in the Long Run

108 Pages Posted: 25 Mar 2020 Last revised: 22 Sep 2021

See all articles by Dmitry Kuvshinov

Dmitry Kuvshinov

Universitat Pompeu Fabra

Kaspar Zimmermann

Leibniz Institute for Financial Research SAFE

Multiple version iconThere are 2 versions of this paper

Date Written: March 2020

Abstract

This paper studies trends and drivers of long-run stock market growth. Between 1870 and 1990, advanced-economy stock market capitalization grew in line with GDP. But over recent decades, a historically unprecedented expansion saw market cap to GDP ratios triple and remain persistently high. While most historical stock market growth was driven by issuances, this recent expansion was fuelled by rising equity prices. We show that the key driver of this structural break was a profit shift towards listed firms, with listed firm profit shares in both GDP and capital income doubling and reaching their highest levels in 146 years.

Keywords: corporate profits, Equity issuance, long-run trends, stock market capitalization, wealth-to-income ratios

JEL Classification: E44, G10, N20, O16

Suggested Citation

Kuvshinov, Dmitry and Zimmermann, Kaspar, The Big Bang: Stock Market Capitalization in the Long Run (March 2020). Available at SSRN: https://ssrn.com/abstract=3560275

Dmitry Kuvshinov (Contact Author)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

Kaspar Zimmermann

Leibniz Institute for Financial Research SAFE ( email )

Frankfurt am Main
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
679
PlumX Metrics