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influential role that the stock market plays in international finance

Measured by value of its listed companies’ securities, the New York Stock Exchange is more than three times larger than any other stock exchange in the world.[395] As of October 2008, the combined capitalization of all domestic NYSE listed companies was US$10.1 trillion.[396] NASDAQ is another American stock exchange and the world’s third-largest exchange after the New York Stock Exchange and Japan’s Tokyo Stock Exchange. However, NASDAQ’s trade value is larger than Japan’s TSE.[395]NASDAQ is the largest electronic screen-based equity securities trading market in the U.S. With approximately 3,800 companies and corporations, it has more trading volume per hour than any other stock exchange.[397]

Because of the influential role that the U.S. stock market plays in international finance, a New York University study in late 2014 interprets that in the short run, shocks that affect the willingness to bear risk independently of macroeconomic fundamentals explain most of the variation in the U.S. stock market. In the long run, the U.S. stock market is profoundly affected by shocks that reallocate the rewards of a given level of production between workers and shareholders. Productivity shocks, however, play a small role in historical stock market fluctuations at all horizons in the U.S. stock market.[398]

The U.S. finance industry comprised only 10% of total non-farm business profits in 1947, but it grew to 50% by 2010. Over the same period, finance industry income as a proportion of GDP rose from 2.5% to 7.5%, and the finance industry’s proportion of all corporate income rose from 10% to 20%. The mean earnings per employee hour in finance relative to all other sectors has closely mirrored the share of total U.S. income earned by the top 1% income earners since 1930. The mean salary in New York City’s finance industry rose from $80,000 in 1981 to $360,000 in 2011, while average New York City salaries rose from $40,000 to $70,000. In 1988, there were about 12,500 U.S. banks with less than $300 million in deposits, and about 900 with more deposits, but by 2012, there were only 4,200 banks with less than $300 million in deposits in the U.S., and over 1,800 with more.