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| Author: | Ramos, S.B. |
| Title: | Competition and stock market development |
| Journal: | European Journal of Finance
2009 : JAN/FEB, VOL. 15:1-2, p. 231-247 |
| Index terms: | stock markets financial markets development stock exchanges competition regulations international |
| Language: | eng |
| Abstract: | This paper explores the development of stock markets in the last decades, aiming to explain why countries change their ranking in financial development. Based on analyzing 101 stock markets from 1975 to 2003, it is found that the divergence is mainly explained by changes in law and regulation enhancing competition. Furthermore, the general level of competition is positively related with stock market development. Competition causes a decrease in the transaction costs and the cost of capital, driving more firms to list and more traders to trade. The results are consistent through time. |
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