Market capitalisation ratio:

The third parameter regarding the functioning of equity markets is the size of the stock market, and a useful measure of this size is the market capitalisation ratio, which is the ratio of market capitalisation (the value of listed shares) to the GDP. It is economically very significant as it is based on the assumption that the size of the stock market is positively correlated with the ability to mobilise capital and diversify risk. Hence it is expected that in an economy with well-developed stock markets, the market capitalisation ratio will be large. This ratio complements the value-traded ratio. The final indicator of the development, maturity and vibrancy of stock markets is the level of transactions costs. In the context of stock markets transactions cost would include explicit costs like  brokerage costs, stamp duty, commission etc, as well as implicit costs like clearing and settlement costs, bad delivery, paperwork and so on. If transactions costs are low, investors will be induced to trade in greater volume, which in turn will raise the value traded ratio.