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Using pooled data from fifteen industrial and developing countries from 1980 to 1995, this paper examines the macroeconomic determinants of stock market development, particularly market capitalization. The paper finds that: (1) real income, saving rate, financial intermediary development, and stock market liquidity are important determinants of stock market capitalization; (2) macroeconomic volatility does not prove significant; and (3) stock market development and financial intermediary development are complements instead of substitutes.
García et al. (Sat,) studied this question.