A new measure of financial development: Theory leads measurement

• 成果类型: Article
• 署名作者: Boyd, John H.; Jalal, Abu M.
• 署名单位: Suffolk University; University of Minnesota System; University of Minnesota Twin Cities
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2012.04.002
• 发表日期: 2012
• 页码: 341-357
• 关键词: financial development; financial markets; debt

摘要

This study presents a new measure of financial development that is directly derived from theory. Our measure, the Marginal Utilization of Debt (hereafter, MUD) comes from the seminal work of Myers (1984), Myers and Majluf (1984) and Shyam-Sunder and Myers (1999). Further, it is directly related to the development facts of Gurley and Shaw (1955). MUD is a global measure that reflects conditions in both debt and equity markets. It varies enormously across nations; from 0.23 in Australia at one extreme to 0.96 in Turkey at the other. Cross-country variations in MUD are not random; they are related to special-purpose measures of debt and equity market advancement from the financial development literature. Richer, more advanced nations have smaller average MUDs. We argue that the MUD may be useful for a variety of purposes and provide three example applications. (C) 2012 Elsevier B.V. All rights reserved.