Stock Market Development And Economic Growth in Nigeria

1998 ◽  
Vol 2 (1) ◽  
pp. 33-38 ◽  
Author(s):  
John C. Anyanwu
Keyword(s):  
Economic Growth ◽  
Risk Management ◽  
Stock Market ◽  
Conceptual Framework ◽  
Corporate Control ◽  
Market Development ◽  
Political Environment ◽  
Stock Market Development ◽  
Long Run

Is the stock market development important for economic growth in Nigeria? One line of research argues that it is not; another line stresses the importance of stock market development in allocating capital, acquisition of information about firms, easing risk management, mobilization of savings, and exerting corporate control. Indeed, some theories provide a conceptual framework for the belief that larger, more efficient stock markets boost economic growth. This article examines whether there is a strong empirical association between Nigerian stock market development and long-run economic growth. Our empirical results suggest that the Nigerian stock market development is positively and strongly associated with long-term economic growth. This implies that Nigerian policymakers should make concerted efforts at removing obstacles to stock market development while creating and sustaining an enabling macroeconomic and political environment for the market’s development.

scholarly journals Stock Market Development and Economic Growth in India

2014 ◽  
Vol 3 (3) ◽  
pp. 30-46 ◽  
Author(s):  
Srinivasan Palamalai ◽  
Karthigai Prakasam
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Economic Activity ◽  
Positive Influence ◽  
Market Development ◽  
Stock Market Development ◽  
Development Indicators ◽  
Turnover Ratio ◽  
Long Run ◽  
Market Capitalisation

The link between stock market development and economic activity has always been the subject of considerable debate in the field of economics and it raises empirical question whether stock market development influences economic activity or whether it is a consequence of increased economic activity. This study attempts to investigate the direction of causality between stock market development and economic growth in the Indian context. Using the cointegration and causality tests for the period June 1991 to June 2013, the study confirms a well defined long-run equilibrium relationship between the stock market development indicators and economic growth in India. The empirical results show bidirectional causality between market capitalisation and economic growth and unidirectional causality from turnover ratio to economic growth in the long-run and short-run. By and large, it can be inferred that the stock market development indicators viz. market capitalisation and turnover ratio have a positive influence on economic growth in India.

scholarly journals Stock market development and economic growth in Tanzania: an ARDL and bound testing approach

2020 ◽  
Vol 5 (3) ◽  
pp. 187-206
Author(s):  
Saganga Mussa Kapaya
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Time Series Data ◽  
Market Development ◽  
Series Data ◽  
Content Type ◽  
Stock Market Development ◽  
Testing Procedures ◽  
Long Run ◽  
Short Run

Purpose The purpose of this paper is to contribute to empirical evidence by recognizing the importance of stock markets in the financial system and consequently its causality to economic growth and vice versa. Design/methodology/approach The study used the autoregressive distribute lag model (ARDL) with bound testing procedures, the sample covered quarterly time-series data from 2001q1 to 2019q2 in Tanzania. Findings The results suggest that stock market development have both negative and positive causality for both short-run dynamics and long-run relationship with economic growth. Economic growth is found to only cause and relate negatively to liquidity both in the short-run and in the long-run. The results show predominantly a unidirectional causality flow from stock market development to economic growth and finds partial causality flow from economic growth to stock market development, as represented by stock market turnover which proxied liquidity. Originality/value The use of quarterly data to reflect more realistically the dynamics of the variables because yearly data may sometimes cover-up specific dynamics that may be useful for prediction and policy planning. The study uses indices to capture general aspects within the stock market against economic growth as an intuitive way to aggregate the stock market development effects.

Does Stock Market Development Promote Economic Growth in Botswana?

2020 ◽  
pp. 1-6
Author(s):  
Erasmus L Owusu ◽  
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Negative Impact ◽  
Market Development ◽  
Financial Deepening ◽  
Bounds Testing ◽  
Stock Market Development ◽  
Long Run ◽  
Stock Value ◽  
Market Capitalisation

This paper examines the empirical linkage between stock market development and sustainable economic growth in Botswana. The paper employs AutoRegression Distributed lags (ARDL)-bounds testing approach and multi-dimensional stock market development proxies to examine this relationship. The paper finds that in the long run, stock market development has a minimal and negative impact on economic growth in Botswana. However, stock market development, especially, market capitalisation development has some short-term impact on economic growth. The paper, however, failed to any impact of stock value traded and the stock value turnover on economic growth. This finding supports the numerous past studies, which have reported negative or inconclusive results on the effects of stock market development on economic growth. The paper, therefore, concludes that there is the need for increasing financial deepening and the reform and diversification of the ownership structure of the capital markets by providing further public and institutional education on the value of stock markets for economic development

scholarly journals Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model

2018 ◽  
Vol 6 (3) ◽  
pp. 69 ◽  
Author(s):  
Md. Qamruzzaman ◽  
Jianguo Wei
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Granger Causality ◽  
Financial Innovation ◽  
Granger Causality Test ◽  
Market Development ◽  
Causality Test ◽  
Stock Market Development ◽  
Long Run ◽  
Testing Approach

This study aims to explore the relationship between economic growth, financial innovation, and stock market development of Bangladesh for the period 1980–2016. To investigate long-run cointegration, this study used the autoregressive distributed lagged (ARDL) bounds testing approach. In addition, the Granger-causality test is used to identify directional causality between research variables under the error correction term. Study findings from the ARDL bound testing approach confirm the existence of a long-run association between financial innovation, stock market development, and economic growth. Furthermore, the findings from the Granger-causality test support bidirectional causality between financial innovation, economic growth and stock market development, and economic growth both in the long run and short run. These findings support the theory that market-based financial development and financial innovation in the financial system can spur economic development.

scholarly journals Stock Market Development and Economic Growth: Empirical Evidence From an Institutional Impaired Economy

2020 ◽  
Vol 11 (5) ◽  
pp. 496
Author(s):  
Maku Affor Owen
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Sustainable Growth ◽  
Market Development ◽  
Stock Market Development ◽  
Test Methodology ◽  
Long Run ◽  
Stock Market Performance ◽  
Bound Test ◽  
The Relationship

The research investigated the relationship linking stock market development and economic growth from 1985 to 2018. In measuring growth, Gross domestic product (GDP) was adopted, while stock market was surrogated by turnover ratio, market-capitalization, and value of share- traded, sourced from the Central Bank of Nigeria (CBN) and the Security and Exchange Commission Database. The inclusion of money supply (M3) captured innovation (financial) in the monetary sector. In investigating the aforementioned relationship, the ARDL Bound test methodology was adopted. Empirical results from the investigation confirm the existence of a long-run relationship between stock market development and growth. Similarly, there was a positive relationship between indices of stock market development and growth, albeit statistically insignificant. The study concluded that financial institutions should concentrate on financial innovation in other dimensions in other to boost stock market performance that will result in sustainable growth.

scholarly journals Stock Market Development And Economic Growth In Hong Kong: An Empirical Investigation

2012 ◽  
Vol 11 (7) ◽  
pp. 795 ◽  
Author(s):  
SY Ho ◽  
NM Odhiambo
Keyword(s):  
Economic Growth ◽  
Hong Kong ◽  
Stock Market ◽  
Time Series Data ◽  
Market Development ◽  
Series Data ◽  
Stock Market Development ◽  
Long Run ◽  
Short Run ◽  
Market Capitalisation

This paper examines the relationship between stock market development and economic growth using time-series data from Hong Kong. The study uses three proxies of stock market development, namely: stock market capitalisation, stock market traded value, and stock market turnover. Given the weaknesses associated with the traditional co-integration techniques, the current study uses the recently introduced ARDL-bounds testing approach to examine the nexus between stock market development and economic growth in a dynamic setting. The empirical results show that the direction of causality between stock market development and economic growth depends on the proxy used to measure the level of stock market development. When stock market capitalisation is used as a proxy for stock market development, a distinct unidirectional causal flow from stock market development to economic growth is found to prevail, without any feedback. However, when stock market turnover is used, a causal flow from economic growth to stock market development is found to prevail in the short run and in the long run, while a causal flow from stock market development to economic growth is only found in the short run. The causality between stock market traded value and economic growth, however, failed to yield any long-run causal relationship from either direction. Only a short-run causality flow from economic growth to stock market traded value could be detected in this case.

scholarly journals Stock Market Development And Economic Growth: The Case Of Mauritius

2011 ◽  
Vol 8 (2) ◽  
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.

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 The Causality between Stock Market Development and Economic Growth: Econometric Evidence from Bangladesh

2018 ◽  
Vol 10 (5) ◽  
pp. 212
Author(s):  
Abdullahil Mamun ◽  
Mohammad Hasmat Ali ◽  
Nazamul Hoque ◽  
Md Masrurul Mowla ◽  
Shahanara Basher
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Real Effective Exchange Rate ◽  
Market Development ◽  
Stock Market Development ◽  
Interest Rate Spread ◽  
Long Run ◽  
Financial Depth ◽  
Effective Exchange ◽  
Effective Exchange Rate

The growth performance of Bangladesh over the last one and a half decades along with the stock market development sparks the question of whether stock market development has a significant impact on economic growth of the economy. The study investigates the time series evidence of the influence of stock market development on growth of Bangladesh economy for the period 1993-2016 employing ARDL Bounds testing approach and finds stock market development has direct impact on economic growth both in the short-run as well as in the long run together with financial depth, interest rate spread and real effective exchange rate. Granger causality tests confirm a bidirectional causal relationship between stock market development and economic growth. However, the study fails to identify a system convergent to equilibrium in regard to stock market development along with other factors that has important economic implications. Persistent improvement in financial depth and fall in interest rate spread throughout the sample period with consistent performance of real effective exchange rate except some spikes in recent years raise the demand for playing the needed role by all concerned for confirming the stability of stock market and its development in order to validate the steady state of equilibrium in the long-run.

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

2016 ◽  
Vol 7 (3) ◽  
pp. 20-36 ◽  
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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