How to compare the magnitude of the banking sector and the stock market?
How can they classify a country as bank based or market based. Is there any indicator to show that the banking sector is bigger than the stock market or vice versa?
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Answer by Mohammad
1. For the purpose, one can compare the 'bank deposits' or 'total assets of banks' with the 'Aggregate Market Capitalisation'.
2. Market capitalisation of a company means share price multiplied by number of shares of the company.
3. The 'Aggregate Market Capitalisation' is the aggregate of capitalisation of of all the listed companies.
3. A moving average of, say, 3 years, of Aggregate Market Capitalisation can be used for the purpose, as, at times, there are wild fluctuations in the Aggregate Market Capitalisation.
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dresdner bank
Image by loop_oh
Building of the Dresdner bank in Frankfurt a.M. / Germany.
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