Capital Market and Business Cycle Volatility

Piyapas Tharavanij

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates cross-country evidence on how capital market affects business cycle volatility. In contrast to the large and growing literature on the impact of finance and growth, empirical work on the relationship between finance and volatility has been relatively scarce. Theoretically, more developed capital market should lead to lower macroeconomic volatility. The major finding is that countries with more developed capital market have smoother economic fluctuations. Results are generated using panel estimation technique with panel data from 44 countries covering the years 1975 through 2004.

Keywords: business cycle; capital market; financial development; financial structure; panel data; market-based; bank-based (search for similar items in EconPapers)
JEL-codes: C33 E32 E44 G00 G21 (search for similar items in EconPapers)
Date: 2007-09-09
New Economics Papers: this item is included in nep-bec, nep-fdg and nep-mac
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Citations: View citations in EconPapers (12)

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https://mpra.ub.uni-muenchen.de/4952/1/MPRA_paper_4952.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/5188/1/MPRA_paper_5188.pdf revised version (application/pdf)

Related works:
Working Paper: CAPITAL MARKET AND BUSINESS CYCLE VOLATILITY (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:4952

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