The Measurement Of Stock Development

There are three variables in the measurement of stock development that can help measure the country's stock development; nominal GDP vs. stock market capitalization, stock trading nominal GDP, and turnover rate. First, stock trading (stock trading against nominal GDP) can be used to measure the development of the stock market. A sharp rise in trading volume / exchanges' value shows the interest in securities or markets. Trading volume and value are important indicators for measuring liquidity level, equity market infrastructure efficiency, and people's investment culture.

The variable explaining the development of the stock market (stkmrk) is equal to the value of listed stock divided by GDP and is for measuring the scale of the stock market. The variable measuring the credit market development (credit) is equal to 17 divided by the deposit bank's debt to the private sector by GDP. The financial dimension (dim) is equal to the sum of the bank's assets and the value of the stock market divided by GDP. 17 Deposit Currency Banks are "all financial institutions that can deposit in the form of deposits are checked or otherwise payable." The definition of "deposit bank" is very close to the definition of "commercial bank" - "commercial bank" is the institution that accepts deposits and commercial loans (BECK T. et al., 1999). The authors call "deposit banks" because they have established a series of IFS databases to consistently define this variable in various countries.

Usually, currency stock (also called "amount of money") consists of two parts, M1 and M2. M1 and M2 are gradually more comprehensive currency indicators. M1 is included in M2. The narrower criterion M1 consists of the most liquid form of currency, currency and check deposit. Non-M1 elements of M2 are mainly savings, small deposits and retail money market mutual funds owned by households. The Fed affects currency stock mainly through the influence on interest rates. As the Federal Open Market Committee lowered the federal interest rate targeted, the rate at which deposit institutions buy and sell funds overnight and other short-term interest rates declined. Lower short-term market rates increase the attractiveness of deposit rates of commercial banks and other deposit institutions. These fluctuations in interest rates are often more delayed than market interest rate fluctuations.