Some Selected Determinants of Stock Exchange Development: Evidence from Greece
Purpose: The paper attempts to assess the determinants of stock market development in Greece. The determinants used in the study are domestic credit to private sector (% of GDP) as a proxy of bank credit and stock market total value traded to GDP as a proxy of liquidity. Design/Methodology/Approach: Ordinary Least Squares (OLS) method of estimation is employed by the author as the methodology of assessing the selected determinants of stock exchange development in Greece. Annual data is utilised from 2001 to 2020. The variables used in the estimation are stock market capitalization to GDP, domestic credit to private sector (% of GDP), and stock market total value traded to GDP. Findings: The determinants that contribute to the Greek stock market development are domestic credit to private sector (% of GDP) and stock market total value traded to GDP. All these determinants have a statistically significant impact on the stock market development. Domestic credit to private sector (% of GDP) has the most influence on stock market development. Domestic credit to private sector (% of GDP) has a negative and statistically significant effect on the stock market development, whereas stock market total value traded to GDP as a measure of liquidity has a statistically significant and positive impact on the stock market development in Greece. Practical Implications: The measures of liquidity can be used to assess the efficiency of stock exchanges in a single country or a group of countries. Originality/Value: The research can spur further discussion about the measures of liquidity of stock exchanges and its effect on stock exchange development. It provides new findings in terms of stock exchange development. It can be used as a starting point to a discussion about different measures of liquidity in the process of assessing a stock exchange development.