STOCK MARKET CAPITALIZATION: HOW TO MANAGE ITS DETERMINANTS?

• Published in: Polish Journal of Management Studies Vol. 27; no. 2; p. 23
• Main Author: Ngoc Toan Bui
• Format: Journal Article
• Language: English
• Published: Częstochowa Czestochowa University of Technology Faculty of Management 01.01.2023
• Subjects: Corruption; Economic development; Emerging markets; Generalized method of moments; Securities markets
• ISSN: 2081-7452
• DOI: 10.17512/pjms.2023.27.2.02

The paper investigates the determinants of stock market capitalization in emerging market and developing economies, including China, Indonesia, India, Sri Lanka, Malaysia, the Philippines, Thailand and Vietnam from 2008-2020. Although this is not a new research topic for developed economies, it is less popular for emerging markets and developing economies, which is this paper’s novelty. Moreover, most current studies have focused solely on exploring the determinants of stock market capitalization, with only a few examining how the stock market capitalization responds to a country's corruption control efforts. This study aims to address this gap by thoroughly analyzing how efforts to control corruption by countries impact stock market capitalization and its determinants. By applying the Generalized Method of Moments (GMM), the author has defined inflation as a negative economic determinant of stock market capitalization. However, it positively correlates to the corruption control index and other economic factors, namely GDP per capita, domestic credit and trade. These confirm that the improvements in macro environments and corruption control play a vital role in the emerging market and developing economies in fostering their stock markets.