and Jovanovic (1993) had previously adopted a similar approach and concluded that there was a positive link, but their findings were shown to be invalid by Harris (1997).
and Jovanovich (1993); Demirguq-Kunt and Levine (1996); Demirguc-Kunt and Maksimovic (1996); Korajczyk (1996); Levine and Zervos (1998) have confirmed that as economies develop, equity markets tend to expand both in terms of the number of listed companies and in terms of market capitalisation.
The results are consistent with the study of (Tokunbo, 2000), Levine and Zervos (1993), Atje
and Jovanovic (1993), Levine and Zervos (1998), and Beck and Levine (2003).
and Jovanovic (1993) put it, "If it is true, then it is ...
and Jovanovic (1993), Levine and Zervos (1998) (henceforth LZ) add measures of stock market and banking development to cross-country studies of growth.
Recent work by Chan and Stulz (1992), Atje
(1993), Ferson (1993), Dumas (1994) addressed to the general issue of global markets efficiency as opposed to the local efficiency of specific markets.
15 An alternative indicator, consisting of the fraction of the capital stock created through intermediated investments, has been recently constructed and tested successfully by Atje
and Jovanovic (1994).
(4) For example, Greenwood and Jovanovic (1990), and Atje
and Jovanovic (1993) find it surprising that more countries are not developing their stock markets as quickly as they can as a means of speeding up their economic development.
There is also a booming literature (see, for example, Atje
and Jovanovic, 1993, King and Levine, 1993, and Levine and Zervos, 1998a) that associates enhanced economic growth with deeper financial markets and banking sectors.
and Jovanovic (1993) construct a cross-country panel for the 1980s and show that trading volume has a strong influence on growth after controlling for lagged investment while bank credit does not.
The relationships between financial markets and growth have received renewed interest in recent years (Greenwood and Jovanovic, 1990; Atje
and Jovanovic, 1993; Pagano, 1993; Rajan and Zingales, 1998; Levine and Zervos, 1998).
48)." A number of subsequent studies have adopted used the growth regression framework in which the average growth rate in per capita output across countries is regressed on a set of variables controlling for initial conditions and country characteristics as well as measures of financial market development [see King and Levine (1993a); Atje
and Jovanovic (1993); Levine and Zervos (1996); Harris (1997) and Levine and Zervos (1998) among others].