Determinants of stock market development: are remittances from OFWs a factor?
Date
2013-10
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Abstract
This paper seeks to determine whether or not overseas Filipino workers' remittances drive the stock market development. Using quarterly data from 1998-2012, we regressed stock market
capitalization, a proxy of stock market development, on remittances and six macroeconomic variables. Cointegration regression showed that remittances indeed have a significantly positive relationship with stock market development. In line with the literature, income level, savings, private foreign direct investment and market liquidity are also positively related to the development of the stock market. Bank development however exhibits negative relationship. Inflation, meanwhile, is not significant.
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Keywords
OFW, remittances, Stock market