Does stock market development and COVID-19 pandemic lead to financial crisis: the case of largest Islamic stock exchange market?

Financial intermediaries and stock markets are important for the economic growth. The relationship between stock market development and economic growth has been extensively studied in the recent years. This study used analytical research design that involves bi-variate analysis by using simple regression model to examine the relationship between stock market development (measured by size and liquidity of the stock market) and economic growth (measured by logarithm of capital GDP at constant price) in Nepal during the period 2007-2017. Secondary data were collected from the official websites of Ministry of Finance (MoF) and Nepal Stock Exchange (NEPSE). It is assumed that economic growth is the function of stock market development for the purpose of data analysis. Empirical results of this study indicate significant positive relationship between economic growth and stock market development. Moreover, stock market development explained considerable variations in economic growth of Nepal i.e. size of the stock market explained 57.7 percent, and liquidity of the stock market explained 41.6 percent variation in economic growth of Nepal.

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LARGE SHAREHOLDERS AND INFORMATION ASYMMETRY IN A TRANSITION ECONOMY–EVIDENCE FROM VIETNAM

The Singapore Economic Review ◽

10.1142/s0217590819500462 ◽

2019 ◽

pp. 1-17 ◽

Cited By ~ 1

Author(s):

XUAN VINH VO

Keyword(s):

Stock Market ◽

Information Asymmetry ◽

Fixed Effects ◽

Transition Economy ◽

Stock Exchange ◽

Emerging Market ◽

Market Development ◽

Stock Market Development ◽

Large Shareholder ◽

Large Shareholders

A growing volume of studies indicate that the information asymmetry problem is a serious issue which significantly hinders stock market development. This problem is more pronounced in emerging markets with weak institutions. The domination of large shareholders in a firm might be a cause of information asymmetry because they are commonly believed to have access to private and value-relevant information. The current paper offers insight into the relationship between multiple large shareholder ownership and stock market information asymmetry in the context of Vietnam, an important emerging market. Employing fixed effects and GMM estimators for a panel data sample of firms listed on the Ho Chi Minh City stock exchange covering the period 2007–2015, the results suggest that the concentration of large shareholder ownership is positively and significantly associated with information asymmetry. This finding has strong implications for policy making process in promoting stock market development.

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An investigation of the post-privatization firms’ financial performance in Nigeria: the role of corporate governance practices

Corporate Governance ◽

10.1108/cg-05-2018-0190 ◽

2019 ◽

Vol 19 (3) ◽

pp. 404-418 ◽

Cited By ~ 3

Author(s):

Ojonugwa Usman ◽

Umoru Adejo Yakubu

Keyword(s):

Corporate Governance ◽

Stock Market ◽

Financial Performance ◽

Stock Exchange ◽

Market Development ◽

Board Composition ◽

Content Type ◽

Stock Market Development ◽

Governance Practices

Purpose The purpose of this study is to investigate the role of corporate governance practices on the post-privatization financial performance of the firms listed on the Nigerian Stock Exchange (NSE) over the period 2005-2014. Design/methodology/approach The study uses a two-step dynamic system Generalized Method of Moments (GMM) estimation technique for 27 privatized firms by considering a wide range of controlled variables such as managerial shareholdings, board composition, debt financing and stock market development. Findings The empirical result suggests that the improvement in the firms’ financial performance is attributed to good corporate governance practices through effective board composition, debt financing (leverage) and stock market development. The result further shows no substantial evidence to support that managerial shareholding improves firms’ financial performance. Research limitations/implications Therefore, based on the empirical findings of this study, the authors recommend that the firms need to maintain the optimum board composition and the ratio of debt to share capital as well as developing the stock market to function effectively. Originality/value This study contributes to the existing literature in several ways: (1) the first time that the role of corporate governance is considered in explaining the post-privatization financial performance of firms listed on the Nigerian Stock Exchange; (2) the paper applies a two-step dynamic system GMM estimation technique, proposed by Arellano and Bover (1995) and Blundell and Bond (1998) to control for the serial correlation and heterogeneity, which remain the major weaknesses of the panel data modeling in the literature.

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The Dynamics Of Stock Market Development In Kenya

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v30i1.8284 ◽

2013 ◽

Vol 30 (1) ◽

pp. 73 ◽

Cited By ~ 1

Author(s):

Sheilla Nyasha ◽

N. M. Odhiambo

Keyword(s):

Stock Market ◽

Stock Exchange ◽

Market Development ◽

Regulatory Body ◽

Trading System ◽

Stock Market Development ◽

Turnover Ratio ◽

Open Outcry ◽

Market Capitalisation ◽

Exchange Control

This paper highlights the origin of the stock market in Kenya, and traces the reforms that have been undertaken to develop the stock market. It also highlights the growth of the Kenyan stock market, as well as the challenges currently facing the market. The country has one stock market, known as the Nairobi Securities Exchange (formerly the Nairobi Stock Exchange). It is one of Africas largest stock markets. Since the early 1980s, a number of stock market reforms have been implemented in Kenya. These include the formation of a regulatory body (Capital Markets Authority CMA) in 1989, the replacement of the "Call-Over" trading system by the floor-based "Open-Outcry System" in 1991, the reduction of listing costs, the relaxation of the exchange control for locally controlled companies, and the repeal of the Exchange Control Act. Following these reforms, Kenyas stock market has developed significantly in terms of market capitalisation, the total value of stocks traded, and the turnover ratio. Although the stock market in Kenya has developed over the years, like many other developing countries' markets, it still faces a number of wide-ranging challenges.

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Stock Market Development And Economic Growth: The Case Of Mauritius

International Business & Economics Research Journal (IBER) ◽

10.19030/iber.v8i2.3104 ◽

2011 ◽

Vol 8 (2) ◽

Cited By ~ 5

Author(s):

Baboo M Nowbutsing ◽

M. P. Odit

Keyword(s):

Economic Growth ◽

Stock Market ◽

Stock Exchange ◽

Market Development ◽

Financial Health ◽

Stock Market Development ◽

Long Run ◽

Short Run ◽

Two Measures ◽

The Impact

Stock market is an indicator of an economy financial health. It indicates the mood of investors in a country. As such, stock market development is an important ingredient for growth. The stock exchange of Mauritius is fairly new compared to many countries. This paper examines the impact of stock market development on growth in Mauritius. A time series econometric investigation is conducted over the period 1989 -20067. We analyse both the short run and long run relationship by constructing an ECM. Two measures of stock market development namely size and liquidity are used. We define size as the share of market capitalization over GDP and liquidity as volume of share traded over GDP. We found that stock market development positively affect economic growth in Mauritius both in the short run and long run.

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Stock Market Development and Economic Growth: An Empirical Analysis of Zimbabwe (1989-2014)

Financial Assets and Investing ◽

10.5817/fai2016-3-2 ◽

2016 ◽

Vol 7 (3) ◽

pp. 20-36 ◽

Cited By ~ 2

Author(s):

Rabson Magweva ◽

Tafirei Mashamba

Keyword(s):

Economic Growth ◽

Stock Market ◽

Stock Exchange ◽

Market Development ◽

Stock Market Development ◽

Long Run ◽

Short Run ◽

To Come ◽

Medium Enterprises ◽

The Relationship

The relationship between stock market development and economic growth varies across nations and regions. This relationship is of significance to regulatory authorities, investors and portfolio managers in their operations aimed at enhancing the welfare of the citizens and clients at large. The purpose of this study is to examine the relationship between these two variables in Zimbabwe for the period 1989 to 2014. The paper employed the Vector Error Correction Model approach after establishing the order of integration (unit root tests) and cointegration between variables. All the variables were found to be stationary at 1% level after first differencing using the Phillips-Peron tests. The long run relationship was negative, whereas the short run coefficients were insignificant. Though contrary to financial theory, the results, to a large extent, testify to what happened during the period. Based on these findings, the Zimbabwe Stock Exchange and Securities and Exchanges Commission are urged to come up with alternative products to lure new listings from the small to medium enterprises. It is also recommended that all the stakeholders focus beyond the Zimbabwe Stock Exchange to promote economic growth as the firms seem to raise funds from other sources.

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Correlates of Stock Market Development and Economic Growth: A Confirmatory Study from Ghana

International Journal of Economics and Finance ◽

10.5539/ijef.v14n3p1 ◽

2022 ◽

Vol 14 (3) ◽

pp. 1

Author(s):

Edward Alabie Borteye ◽

Williams Kwasi Peprah

Keyword(s):

Economic Growth ◽

Stock Market ◽

Positive Relationship ◽

Stock Exchange ◽

Negative Relationship ◽

Positive Association ◽

Market Liquidity ◽

Market Development ◽

Stock Market Development ◽

The Relationship

The study confirms the debate on whether stock market development correlates to economic growth. The dimensions used for the stock market development consisted of market liquidity, size, and capitalization. Economic growth was represented by the real gross domestic product (GDP) growth rate. Based on secondary data obtained from the Ghana Stock Exchange (GSE) and Ghana Statistical Service from 2014 to 2018, a correlational research design was adopted to analyze the data with SPSS 20v by using bivariate and regression. The study found that there is a high positive relationship between market liquidity and economic growth, a moderate negative relationship between market size and economic growth, and a moderate positive relationship between market capitalization and economic growth. Also, the stock market development of market liquidity, size, and capitalization predict 95.7 percent of economic growth. The study summarized that there is a high positive association between stock market development and economic growth as a confirmatory revelation, but all the relationship results were not statistically significant. The result points to the casualty of the relationship between stock market development and economic growth. The study recommends that more firms must be encouraged to be listed on GSE to enhance economic growth in Ghana.

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Formation of optimal capital structure of domestic corporations in times of crisis: Econometric analysis of determinants

Economic Analysis Theory and Practice ◽

10.24891/ea.19.2.374 ◽

2020 ◽

Vol 19 (2) ◽

pp. 374-398

Author(s):

V.V. Metel'skaya

Keyword(s):

Regression Analysis ◽

Financial Crisis ◽

Stock Market ◽

Capital Structure ◽

Market Development ◽

Macroeconomic Factors ◽

Stock Market Development ◽

Optimal Capital Structure ◽

Correlation And Regression Analysis ◽

Optimal Capital

Subject. The article addresses building the optimal capital structure in the face of financial globalization, taking into account the ever-changing factors of external economic and geopolitical environment, including the financial crisis. Objectives. The purpose is to perform empirical tests of hypotheses about the nature of corporate financial leverage dependence on traditional determinants during and after the financial crisis in Russia's emerging market. I used a large data set on 49 public companies in seven leading sectors of the Russian economy from 2011 to 2017. Methods. The study employs the correlation and regression analysis. Results. The results of correlation and regression analysis show that the application of traditional theories of capital structure in the current conditions of financial globalization in a developing country is ineffective for forming an optimal capital structure; macroeconomic factors have a significant impact on the formation of corporate capital structures, which is particularly reflected during and after the crisis; the financial crisis has a considerable impact on the capital structure of companies; the determinant of stock market development has a real impact on leverage and plays an important role in financial decision-making after the financial crisis. Conclusions. I revealed inverse relationship between the leverage and variable size of companies after financial crisis, which contradicts to the trade-off theory and corresponds to the pecking order theory. This supports the hypothesis that macroeconomic factors are crucial, but the variable of stock market development has increased essentially as compared to the pre-crisis period.

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