Stock market development: a reflection of governance regulatory framework in Nigeria

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fisayo Fagbemi ◽  
Opeoluwa Adeniyi Adeosun ◽  
Kehinde Mary Bello
Keyword(s):  
Stock Market ◽  
Institutional Environment ◽  
Market Performance ◽  
Market Development ◽  
Limited Attention ◽  
Content Type ◽  
Stock Market Development ◽  
Regulatory Quality ◽  
Stock Market Performance ◽  
The Impact

PurposeThe article examines the possible long-run and short-run impact of regulatory quality on stock market performance in Nigeria for 1996–2019 period.Design/methodology/approachThe study adopts autoregressive distributed lag (ARDL) bounds test and cointegrating regression techniques.FindingsFindings reveal that regulatory quality positively and significantly influences the performance of stock market, which strengthens the view that market-enhancing governance can engender an improvement in stock market performance. The study further demonstrates that quality of the regulatory environment is a critical component of market operations, since the improvement of the operation of stock market performance depends on appropriate policy measures, which could be the outcome of improved governance.Practical implicationsIt is suggested that, while improving the institutional environment is a challenge to regulators, there is need for strong and effective regulatory mechanism to enhance the development of stock market in the country.Originality/valueBased on the two competing hypotheses and limited attention, previous studies accorded the role of regulatory quality in the performance of stock market in the context of Nigeria. This study assessed the gap in the literature by taking the task of validating the impact of regulatory quality on stock market development.

Contribution of StockMarket Towards Economic Growth: An Empirical Study on Bangladesh Economy

2017 ◽  
Vol 13 (4) ◽  
pp. 238 ◽  
Author(s):  
Sonia Rezina ◽  
Nusrat Jahan ◽  
Mohitul Ameen Ahmed Mustafi
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Market Performance ◽  
Unit Root Test ◽  
Causality Test ◽  
Stock Market Development ◽  
Stock Market Performance ◽  
Augmented Dickey Fuller ◽  
Johansen Cointegration Test ◽  
The Impact

The economic growth of a country is influenced by many different factors. This study aims to investigate the causal relationship between stock market development and economic growth in Bangladesh as well as the impact of stock market performance upon the economic growth of Bangladesh. The stock market performance has been measured by market capitalization ratio, number of listed companies, total value traded and turnover ratio; and the economic growth was represented by real gross domestic product. The periods taken for study were from year 1994 to year 2015.The effect of the stock market reform will also be addressed to explain the relationship. The study has been conducted using Augmented Dickey- Fuller Unit Root Test, Johansen Cointegration Test and the Granger Causality Test. The findings of the research should help the policy makers and regulators to look after their interest in the financial sector of the country.

On the linkage between stock market development and economic growth in emerging market economies

2015 ◽  
Vol 14 (4) ◽  
pp. 363-381 ◽  
Author(s):  
Pramod Kumar Naik ◽  
Puja Padhi
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Emerging Economies ◽  
Emerging Market ◽  
Market Development ◽  
Data Series ◽  
Annual Data ◽  
Content Type ◽  
Stock Market Development ◽  
The Impact

Purpose – The purpose of this study is to empirically examine the impact of stock market development on the economic growth for a panel of 27 emerging economies using annual data over the period from 1995 to 2012. Design/methodology/approach – A second-generation panel unit root test developed by Pesaran (2007) has been used to test the stationary properties of the data series. To achieve the study objectives and to mitigate the endogeneity problem that exists in the given model, the authors use a dynamic panel “system GMM” estimator. The authors also use a heterogeneous panel causality test proposed by Dumitrescu and Hurlin (2012) to examine the direction of causality among the variables. Findings – The empirical findings indicate that stock market development significantly contributes to economic growth. Further, a unidirectional causality running from stock market development to economic growth has been found. This finding is consistent with the supply-leading hypothesis. Besides stock market development, it is also evident that macroeconomic variables, such as investment ratio, trade openness and exchange rates, have significant impact on economic growth. Research limitations/implications – The findings suggest that a well-functioning stock market, a more globalized economy and increasing aggregate investment can potentially foster the economic growth in those emerging economies. Originality/value – Unlike other studies, this study constructs three alternate composite indices along with the individual indicators of stock market development and applies robust panel econometric techniques to establish more reliable results.

Analysis of Stock Market Development, Foreign Private Investment and Economic Growth in Nigeria

2018 ◽  
Vol 10 (1-2) ◽  
pp. 1-17
Author(s):  
Onyinye I. Anthony-Orji ◽  
Anthony Orji ◽  
Jonathan E. Ogbuabor
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Private Investment ◽  
Least Square ◽  
Market Development ◽  
Stock Market Development ◽  
Long Run ◽  
Stock Market Performance ◽  
Foreign Private Investment ◽  
The Impact

The study estimated the impact of stock market development and foreign private investment on economic growth in Nigeria over the period of 1985–2016, using secondary data from various publications of the Central Bank of Nigeria. The ordinary least square (OLS) technique was employed in this study, while the Engel and Granger co-integration approach was applied to determine the long-run relationship between the variables. The result showed that market capitalisation, all share index and real exchange rate have statistically significant impact on economic growth, while foreign direct investment, trade openness and gross national savings have insignificant impact on growth. The study also showed that there is a long-run relationship among stock market development, foreign private investment and economic growth in Nigeria. The error correction model (ECM) results showed that the model adjusts to equilibrium in the short run and that about 51 per cent of the disequilibrium between gross domestic product and the independent variables is corrected each year. The study recommended that policymakers and monetary authorities should gear efforts towards formulating policies that will fine-tune stock market performance and reduce issues, such as, unpaid dividends, delay in dividend payments and unhealthy transfer of stocks. This is pertinent to encourage greater population of the citizenry to invest in the stock market. Finally, the study concluded that provision and improvement of infrastructure and power as well as enforcement of investor-friendly policies by the government is needed as these will encourage the establishment of more firms and industries that will participate in the stock market, thereby contributing to the growth of the economy. JEL Classification: E22, F21, F43, O16

scholarly journals Political Regimes and Stock Market Performance in Africa

2016 ◽  
Vol 16 (3) ◽  
pp. 240-249 ◽  
Author(s):  
Simplice A Asongu ◽  
Jacinta C Nwachukwu
Keyword(s):  
Stock Market ◽  
Political Institutions ◽  
Market Performance ◽  
Press Freedom ◽  
Market Development ◽  
Political Regime ◽  
African Countries ◽  
Stock Market Development ◽  
Legal Origins ◽  
Stock Market Performance

This article assesses the effect of political institutions on stock market performance in 14 African countries for which stock market data are available for the period 1990–2010. The estimation technique used is a two-stage least-squares instrumental variable methodology. Political regime channels of democracy, polity and autocracy are instrumented with legal-origins, religious-legacies, income-levels and press-freedom qualities to account for stock market performance dynamics of capitalisation, value traded, turnover and number of listed companies. The findings show that countries with democratic regimes enjoy higher levels of financial market development compared to their counterparts with autocratic inclinations. As a policy implication, the role of sound political institutions has important effects on both the degree of competition for public office and the quality of public offices that favour stock market development on the African continent.

scholarly journals Nexus between Governance Indicators & Sustainable Stock Market Development in Pakistan: Evidences from Symmetric and Asymmetric Analysis

2021 ◽  
Vol 9 (3) ◽  
Author(s):  
Kashif Islam ◽  
Ahmad Raza Bilal
Keyword(s):  
Stock Market ◽  
Rule Of Law ◽  
Negative Impact ◽  
Political Stability ◽  
Market Development ◽  
Stock Market Development ◽  
Governance Indicators ◽  
Regulatory Quality ◽  
Non Linear ◽  
The Impact

The hidden non-linear association between governance indicators & stock market development (SMD) of Pakistan has been scrutinized in this study by using two comparative co-integrating techniques known as ARDL (Auto-regressive Distributed Lag) & NARDL (Non-linear ARDL). Empirical evidence suggests that misrepresented inferences arise by ignoring hidden non-linearity nexus between the variables. The ARDL results indicate that political stability & absence of violence/terrorism does not impact directly the SMD of Pakistan. Voice & accountability positively and significantly impact SMD, but rule of law does not impact SMD of Pakistan directly. The regulatory quality is highly significant and negatively impacts SMD. Contrarily, the NARDL frame indicates significant differences amid coefficients of components of governance index, denoting asymmetric links between variables. The Positive & Negative sums of partial decompositions of Rule of Law, Regulatory Quality, Political Stability & Absence of Violence/Terrorism (PS&AVT), and Voice & Accountability (V&A) significantly impact SMD. The impact of partial Negative multipliers of Regulatory Quality, and PS&AVT has a highly significant and negative impact, while V&A has a significant and positive impact on SMD. The impact of Positive partial multipliers of all variables is positive and significant except V&A. The comparative diagnostics extricate precariousness in policy moratorium. This study will add credence to the predictive power of governance indicators towards SMD of Pakistan by incorporating Positive and Negative decomposed multipliers.

Impact of macroeconomic variables on the performance of stock exchange: a systematic review

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rakesh Kumar Verma ◽  
Rohit Bansal
Keyword(s):  
Stock Market ◽  
Developing Economies ◽  
Market Performance ◽  
Investor Sentiment ◽  
Macroeconomic Factors ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Thematic Strategy ◽  
Stock Market Performance ◽  
The Impact

PurposeThis paper aims to identify various macroeconomic variables that affect the stock market performance of developed and emerging economies. It also investigates the effect of these factors on the stock markets of both economies. The impact of these variables on broad market indices and sectoral indices is investigated and compared too.Design/methodology/approachThe publications for the study were retrieved from databases such as Emerald Insight, EBSCO, ScienceDirect and JSTOR using the keywords “Macroeconomic variables” and “Stock market” or “Stock market performance.” The result demonstrated a growing corpus of scholarly work in the domain of stock market. The study was carried out separately for each macroeconomic indicator. Given a large number of articles under consideration, the authors began by reading the titles and abstracts of all publications to identify those that were relevant. The papers are evaluated in Excel and the articles for review range from 1972 to 2021.FindingsThe authors found that gross domestic product (GDP), FDI (Foreign Direct Investment) and FII (Foreign Institutional Investment) have a positive effect on both emerging and developed economies’ stock market while gold price has a negative effect. Interest rates had a negative impact on both economies except for a few developing countries. The relationship with oil prices was positive for oil exporting countries while negative for oil importing countries. Inflation, money supply and GDP are the macroeconomic variables that have the same effect on sectoral indices as they do on broad market indices. The impact was sector-specific for the remaining variables.Research limitations/implicationsThis paper gives an overview of relation and effect covering variety of macroeconomic variables and stock market indices. Still, there is a scope for further research to analyze the effect on thematic, strategy and sectoral indices. A longer time horizon with new variables, such as bank deposit growth rate, nonperforming assets of banks, consumer confidence index and investor sentiment, can be studied using high-frequency data. This research may help stakeholders adopt and manage their policies during a crisis or economic slump.Practical implicationsThis study will assist investors, researchers and educators in the fields of economics and finance in understanding how macroeconomic factors affect the stock market. Furthermore, this study can guide in portfolio diversification strategy across multiple sectors by examining the impact of macroeconomic factors specific to sectoral indices. This paper provides insight into society and researchers since it integrates a number of macroeconomic variables and their interaction with the stock market. It may also help pension funds and mutual fund firms to hedge their funds and allocate equity portfolios.Originality/valueWith respect to India, this study looked at new macroeconomic variables and sectors. It contrasted the impact of these variables in developed and developing economies. The effect of broad and sectoral stock indexes was also investigated and compared. The authors examined how these variables responded during crisis and economic downturns by using articles from a longer time frame. This research also looked into how changing the frequency of data for the variables altered stock performance. This paper emphasized the need for more research into thematic, strategy and broad market indices, such as small-cap and mid-cap indices.

How does the cryptocurrency market affect the stock market performance in the MENA region?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mina Sami ◽  
Wael Abdallah
Keyword(s):  
Stock Market ◽  
Generalized Method Of Moments ◽  
Market Performance ◽  
Cointegration Analysis ◽  
Mena Region ◽  
Content Type ◽  
Gulf Countries ◽  
Stock Market Performance ◽  
The Government ◽  
The Impact

PurposeThis paper examines the impact of cryptocurrency market on the stock market performance in Middle East and North Africa (MENA) region. A comparative analysis is extended to distinguish this impact between Gulf countries and other economies in the region.Design/methodology/approachThe analysis uses the information of cryptocurrencies and the stock market indices of the Gulf countries for the period 2014–2018 on a daily basis. Two strategies have been implemented to fulfill the goal of the study: first, the tests strategy, which is applied using the cointegration analysis and panel-specific forms of Granger causality; second, the regression strategy, which is applied mainly using the instrument variable with generalized method of moments (IV-GMM) method.FindingsThe results show that there is a significant relationship between the cryptocurrency market and the stock market performance in the MENA region. On the one hand, for the Gulf countries that claim full obedience to the Islamic Sharia rules, each 1% increase in the cryptocurrency returns reduces the stock market performance by 0.15%. On the other hand, for the non-Gulf (other MENA) countries that have flexibility in applying the Islamic Sharia rules or do not follow it, the stock market performance increases by 0.13%, for each 1% increase in the cryptocurrency returns.Originality/valueThe paper proposes two main contributions: First, the paper introduces the cryptocurrency returns as one of the determinants of the stock market performance in the MENA region. This impact is distinguished based on the degree of applying the Islamic Sharia rules and the vision of the government to the stock market. Second, the paper provides an empirical guideline for governments in the MENA region for efficient measures in their stock market, given the important expansion of the cryptocurrency market and the government type.

scholarly journals A cross-country and country-specific modelling of stock market performance, bank development and global equity index in emerging market economies: A case of BRICS countries

PLoS ONE ◽  
2020 ◽  
Vol 15 (11) ◽  
pp. e0240482
Author(s):  
Ebere Ume Kalu ◽  
Augustine C. Arize ◽  
Okoro E. U. Okoro ◽  
Florence Ifeoma Onaga ◽  
Felix Chukwubuzo Alio
Keyword(s):  
Stock Market ◽  
Emerging Market ◽  
Market Performance ◽  
Market Development ◽  
Stock Market Development ◽  
Brics Countries ◽  
Long Run ◽  
Stock Market Performance ◽  
Cross Country ◽  
Equity Index

This study investigated in cross-country and panel form the interactions of bank development, stock market development and global equity index, focusing on the BRICS countries covering the period 1990 to 2018. We found a bidirectional causation between bank development (CPSGDP) and stock market performance as proxied by the depth of the markets (MCAPGDP) in the BRICS countries. Cointegration was also found using the panel cointegration framework and the bounds test for the ARDL estimators. This largely proves that a long-run relationship of both direct and reverse nature exists between bank development and stock market performance. For the bank development and market performance models respectively, all the error-correction terms were found to be negatively significant, indicating that they both share dynamic profile and adjust appreciably to deviations from equilibrium between the short run and the long run. The global equity index showed that stock market development interacts more with the global financial environment than bank development in the BRICS countries. Our findings support the complementarity and coevolution hypothesis in the stock market and bank development nexus.

Investment environment, stock market perception and stock investments after stock market crash

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammad Tariqul Islam Khan ◽  
Siow-Hooi Tan ◽  
Lee-Lee Chong ◽  
Gerald Guan Gan Goh
Keyword(s):  
Stock Market ◽  
Market Performance ◽  
Mediating Effect ◽  
Individual Investors ◽  
Investment Environment ◽  
Stock Market Crash ◽  
Content Type ◽  
Stock Market Performance ◽  
Market Perception ◽  
Stock Investments

PurposeThis study examines how the importance of external investment environment factors affect stock market perception, and how stock market perception affects stock investments after stock market crash witnessed by individual investors in one of the emerging stock markets.Design/methodology/approachA cross-sectional survey was administrated among 223 individual investors who experienced stock market crash in 2010–2011 in Bangladesh, and the proposed model was tested by the partial least squares-structural equation modeling PLS-SEM model.FindingsFindings show that the importance of Bangladesh's stock market performance, government policy, economic issues and neighboring country's stock market performance has effects on investors' stock market perception. This perception, in turn, decreases monthly stock trading and short-term investment horizon. The findings further show the mediating effect of stock market perception.Practical implicationsInvestors need to carefully consider the external investment environment when they form their stock market perception, as this perception drives stock investments. Analogously, regulators should ensure releasing timely and updated statistics on external investment factors.Originality/valueAddressing those investors who encountered stock market crash, a set of external investment environment issues, stock market perception and stock investments are new in the literature.

scholarly journals Loss aversion, overconfidence of investors and their impact on market performance evidence from the US stock markets

2020 ◽  
Vol 25 (50) ◽  
pp. 451-478
Author(s):  
Ahmed Bouteska ◽  
Boutheina Regaieg
Keyword(s):  
Stock Market ◽  
Economic Performance ◽  
Loss Aversion ◽  
Market Performance ◽  
Ordinary Least Squares ◽  
Company Performance ◽  
Service Firms ◽  
Content Type ◽  
The Us ◽  
The Impact

Purpose The current study aims to investigate the impacts of two behavioral biases, namely, loss aversion and overconfidence on the performance of US companies. First, the impact of loss aversion on the economic performance of companies was assessed. Second, the impact of overconfidence on market performance was discussed. Design/methodology/approach This study used around 6,777 quarterly observations on the population of US-insured industrial and services companies over the 2006-2016 period. Ordinary least squares (OLS) regression in two panel data models were used to test the hypotheses formulated for the study. Findings It was documented that the loss-aversion bias negatively affects the economic performance of companies and this is achieved for both sectors. In contrast, the findings suggest that overconfidence positively affects market performance of industrial firms but negatively affects market performance in service firms. Further robust evidence was found that overconfidence bias seems to be dominant, and hence, investors may tend to be more overconfident rather than more loss-averse. Originality/value This research can be extended by focusing on the following question: What is the impact of the contradictory (positive and negative) effects of an investor's loss aversion and overconfidence on the US company performance in case of realization of a stock market crisis or stock market crash?

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