Abstract:
The aim of this study is to investigate the effect of privatization on the development of the stock market. To this end, panel data from G8 countries during the period 1995-2006 has been used. Stock market development is described by four proxies, based on which four different scenarios are investigated. Also, to more accurately observe the effect of privatization on stock market development, control variables have been used. Each of the control variables was added to the model step by step, which resulted in each scenario having five states. In this way, the effect of privatization on stock market development is investigated in twenty different situations. In this research, the two-stage least squares model was used in hypothesis testing. Empirical results in most cases confirm the existence of positive and significant effects of privatization on stock market development.
Machine summary:
3- Introduction of the model, variables, and data In this research, the effect of privatization on stock market development in the Group of Eight countries is investigated.
The overall results indicate that privatization and human capital have a significant effect on stock market expansion.
These results show that privatization, human capital, and inflation have a significant effect on stock market expansion.
Table (2): The effect of privatization on stock market expansion (Refer to the page image) Source: Research findings Dependent variable: Market capitalization ratio.
Fifth case: The effect of privatization, human capital, inflation, the Gini coefficient, and the quality of law enforcement on the transaction volume ratio: As specified in all cases of this scenario, the effect of privatization on stock market expansion is positive and significant.
First case: The effect of privatization on the number of companies admitted to the stock exchange: The overall results show that the effect of privatization on stock market expansion is significant.
Second case: The effect of privatization and human capital on the number of companies admitted to the stock exchange: The overall results indicate the insignificance of the effect of human capital on stock market expansion.
Fifth case: The effect of privatization, human capital, inflation, the Gini coefficient, and the quality of law enforcement on the number of companies admitted to the stock exchange: The overall results in this case indicate the significance of the effect of privatization on stock market expansion.
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