Development of European Stock Markets: A Comparative Analysis

Abstract :

In the literature concerning stock exchanges authors often refer to the concept of market development. At the same time, in most cases they do not provide a precise definition of this term and measures for distinguishing between developed and emerging markets. In fact, there is no single criterion that can be used to measure and assess stock market development. We provide a list of indicators capturing its different aspects and apply them in a comparative analysis of the European stock exchanges. For this purpose, we apply two clustering methods – the K-means and the Ward hierarchical algorithms. We conduct the study aimed at reducing the set of the proposed indicators to the most informative ones and find the optimal clusterization.