Graduation Year


Date of Submission


Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Richard Burdekin

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Rights Information

2024 Grayson K Therron


The stock markets of developing countries are leading the world in economic growth. Thus, it is pertinent to learn the essential factors of stock market expansion in emerging markets. This study provides an empirical investigation of connections between stock market growth and relevant macroeconomic factors of developing nations. This study covers 32 developing countries (Bangladesh, Brazil, Botswana, Bulgaria, Colombia, Algeria, Egypt, Arab Rep., Ghana, Indonesia, India, Iran, Jamaica, Jordan, Kenya, Lebanon, Sri Lanka, Morocco, Mexico, Namibia, Nigeria, Pakistan, Peru, Philippines, Papua New Guinea, Rwanda, Eswatini, Tunisia, Venezuela, Vietnam, South Africa, Zambia, Zimbabwe) across a 32 year time period (1990-2022). The independent variables are seven key macroeconomic drivers of stock market development. Stock Market development is measured using two dependent variables. This study implements a OLS (Ordinary Least Squares) with robust standard errors for each year, Fixed-Average Linear Model with robust standard errors, Regression Analysis with Fixed-Effects (entity effects), and Difference-in-Differences (DiD) test to derive its results. Depending on which regression one refers to, that, with statistical significance, the variables Central Government Net Debt, M2 Money Supply, and Central Government Net Lending indicate their hypothesized relationship with the dependent variables. Furthermore, countries were divided into Asian and African countries. Separate Fixed-Effects Regressions were performed, indicating that GDP Growth per Capita and Exchange Rates might affect Stock Market Returns differently based-on the continent. While the relationship of the other five macroeconomic variables with Stock Market Returns are the same, regardless of geography. Although none of the results demonstrated causality, the findings suggest that policymakers and world leaders should encourage the growth of macroeconomic factors to enhance stock market growth.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.