Talk:Market depth

October 2016

I have added maintenance tags for this article due the extra long, badly written lead and the fact that the subject matter isn't thoroughly explained in lay mans terms, like that which would be expected on an encyclopædia. I do not have adequate knowledge in the area (which is why I came across the article) so I request that a user who does could make the required changes. Thanks. Uamaol (talk) 23:24, 10 October 2016 (UTC)

Hi, Uamaol, I am taking care of this. Whoever added all the text got confused between "market depth" and "financial depth of a country". Csgir (talk) 19:07, 10 October 2018 (UTC)

Removed Text - 1

Hello, whoever is reading this - kindly note that the below text was removed from the lead section because it is about "financial depth of an economy" whereas the page is about "market depth" during trading.

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A country’s financial structure is composed of a mixture of banks, non-bank financial institutions (NBFIs), and the financial markets. Financial depth is used as a measure of the size of financial institutions and financial markets in a country.[1] Well-developed financial systems are deep, i.e. sizeable relative to the overall size of the economy, and provide the economy with credit and other financial services.

Studies show a strong correlation between financial depth, long-term economic growth and poverty reduction.[2] Globally, the annual average value of private credit across countries was 39 percent with a standard deviation of 36 percent. Averaging over the time period of 1980–2010, private credit constitute less than 10 percent of GDP in Angola, Cambodia, and Yemen, while exceeding 85 percent of GDP in Austria, China and the United Kingdom. For financial markets, research has shown that the trading of firms’ ownership (e.g. through stock exchanges) in an economy is closely tied to the rate of economic development. For instance, the average of total value of stock traded is about 29 percent of GDP. In less developed countries such as Armenia, Tanzania, and Uruguay, stock value traded annually averaged less than 0.23% over the 1980–2008 sample (10th percentile). In contrast, stock value traded averaged over 75 percent in China (both Mainland and Hong Kong SAR), Saudi Arabia, Switzerland, and the United States (90th percentile).[3]

Thanks for your time. Csgir (talk) 19:09, 10 October 2018 (UTC)

Removed Text - 2

Hello, whoever is reading this - kindly note that the below text was removed from the body section because it is about "financial depth of an economy" whereas the page is about "market depth" during trading.

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Measurement

Multiple proxies are in use to measure financial depth. For financial institutions, the most common measurements are private credit as a percentage of GDP and total banking assets to GDP. Private credit is defined as the amount of deposit money credited to the private sector by banks, while total banking assets include credit to government and bank assets other than private credit. Aside from these two bank-related measures of financial depths, there are a few non-bank financial institutions (NBFIs) proxies such as total assets of NBFIs to GDP, which includes mutual fund assets to GDP, pension fund assets to GDP, insurance company assets to GDP, insurance premiums (life) to GDP, and insurance premiums (non-life) to GDP. ).

For financial markets, the focus is on measuring the size of stock markets and bond markets ( two main segments of the financial market). The relevant proxies are stock market capitalization to GDP and outstanding volume of debt securities (private and public) to GDP respectively. Other market development indicators include stock market transactions as a share of GDP. Stock market capitalization measures the value of listed shares on a country’s stock exchanges as a share of GDP, while stock market transactions indicator incorporates information on the size and activity of the stock market, not only the value of listed shares.

The ratio of the depth indicators for banks and financial markets, called the financial structure ratio, can show insights into the relative mixture of financial institutions and financial markets in a system. The degree to which the financial system is ‘bank-based’ or market-based’ worth investigating, as literature has shown that when a country develops, services provided by financial markets tend to gain prominence as opposed to those provided by banks.

Thanks for your time. Csgir (talk) 19:12, 10 October 2018 (UTC)