Capital Market, Severity of Business Cycle, and Probability of Economic Downturn

Piyapas Tharavanij

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the effect of capital market development on severity of economic contraction, and probability of economic downturn. The major finding is that countries with deeper capital market would face less severe business cycle output contraction, and lower chance of an economic downturn. The results hold even after controlling for other relevant variables, country specific effects, and state dependence. However, marginal effects are relatively small. 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 C34 C35 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-cfn and nep-mac
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Citations: View citations in EconPapers (2)

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https://mpra.ub.uni-muenchen.de/4953/1/MPRA_paper_4953.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/5189/1/MPRA_paper_5189.pdf revised version (application/pdf)

Related works:
Working Paper: CAPITAL MARKET, SEVERITY OF BUSINESS CYCLE, AND PROBABILITY OF AN ECONOMIC DOWNTURN (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:4953

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