What Drives Stock Market Development in the Middle East and Central Asia—Institutions, Remittances, or Natural Resources?

Author/Editor:

Andreas Billmeier ; Isabella Massa

Publication Date:

July 1, 2007

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

In this paper, we assess the macroeconomic determinants of stock market capitalization in a panel of 17 countries in the Middle East and Central Asia, including both hydrocarbon-rich countries and economies without sizeable natural resource wealth. In addition to traditional variables, we include an institutional variable and remittances among the regressors. We find that (i) both institutions and remittances have a positive and significant impact on market capitalization; and (ii) both regressors matter, especially in countries without significant hydrocarbon sectors; whereas (iii) in resource-rich countries, stock market capitalization is mainly driven by the oil price.

Series:

Working Paper No. 07/157

Subject:

English

Publication Date:

July 1, 2007

ISBN/ISSN:

9781451867213/1018-5941

Stock No:

WPIEA2007157

Format:

Paper

Pages:

21

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