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.

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.

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.

scholarly journals Bank Versus Stock Market Development in Brazil: An ARDL Bounds Testing Approach

2017 ◽  
Vol 12 (1) ◽  
pp. 7-21 ◽  
Author(s):  
Sheilla Nyasha ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Regression Analysis ◽  
Stock Market ◽  
Financial Development ◽  
Banking Sector ◽  
Bounds Testing ◽  
Stock Market Development ◽  
Long Run ◽  
Short Run ◽  
The Impact

AbstractThis paper examines the impact of both bank-based and market-based financial development on economic growth in Brazil during the period from 1980 to 2012. To incorporate all of the aspects of financial development into the regression analysis, the study employs a method of means-removed average to construct both bank-based and market-based financial development indices. Based on the ARDL approach, the empirical results show that there is a positive relationship between market-based financial development and economic growth in Brazil in the long run, but not in the short run. The results also show that bank-based financial development in Brazil does not have a positive effect on economic growth. This applies irrespective of whether the regression analysis is conducted in the short run, or in the long run. The study, therefore, concludes that it is the stock market, rather than banking sector development, that drives long-run economic growth in Brazil.

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.

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 Stock Market Development and Economic Growth in Bangladesh: An Empirical Appraisal

2019 ◽  
pp. 252-258
Author(s):  
Md. Shakhaowat Hossin ◽  
Md. Shafiul Islam
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Policy Formulation ◽  
Market Development ◽  
Test Results ◽  
Causality Test ◽  
Stock Market Development ◽  
Long Run ◽  
Integration Test ◽  
The Impact

This article seeks to examine the impact of the Bangladesh’s stock market development on its economic growth from the period of 1989-2012. We have used Johansen Cointegration test to estimate the long-run equilibrium relationship between the variables and the Granger causality test was conducted in order to establish causal relationship, while the model was estimated using the error correction model (ECM). Johansen co-integration test results show that the Bangladesh’s stock market development and economic growth are co-integrated. This indicates that a long run relationship exists between stock market development and economic growth in Bangladesh. The causality test results suggest a unidirectional causality from stock market development to the economic growth. On the other hand, there is no “reverse causation” from economic growth to stock market development. The evidence from this study reveals that the activities in the stock market tend to impact positively on the economy. It is recommended therefore that stock market regulatory authority should therefore address policy issues that are capable of boosting the investors’ confidence through improved policy formulation and creation of awareness.

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 The impact of stock market development on economic growth: A GMM approach

2021 ◽  
Vol 18 (3) ◽  
pp. 74-81
Author(s):  
Toan Ngoc Bui ◽  
Thu-Trang Thi Doan
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Capital Accumulation ◽  
Developing Economies ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
The Philippines ◽  
Market Development ◽  
Stock Market Development ◽  
The Impact

This study investigated the impact of stock market development (SMD) on economic growth (EG) among emerging markets and developing economies (EMDEs) in Asia. The data sample includes eight Asian EMDEs (China, Indonesia, India, Sri Lanka, Malaysia, the Philippines, Thailand, and Vietnam) from 2008 to 2019. These countries share several similarities, so this ensures reliability of the results. Regarding the analysis, the generalized method of moments (GMM) is used for the estimation. The results show that SMD exerts a positive impact on EG. This finding confirms the importance of SMD in improving efficient capital accumulation and allocation, and also allows investors to reduce risks and increase liquidity, which will boost EG. Further, the significant influence of domestic credit (DC), control of corruption (CC), and inflation (INF) on EG is also highlighted. These findings are valuable empirical evidence that greatly contributes to reinforcing the suitability of classical economic growth theories, especially the theory of endogenous growth. They are also essential to EMDEs in Asia. Accordingly, the EMDEs should develop effective policies to improve the stock market’s scale, which contributes substantially to the development of EG. Moreover, these economies need to pursue many appropriate policies in sync, such as stimulating SMD, improving governance effectiveness and implementing effective macroeconomic policies. Acknowledgment This study was funded by the Industrial University of Ho Chi Minh City (IUH), Vietnam (grant number: 21/1TCNH01).

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 The Impact of Stock Market Development on Economic Growth: The Case of Botswana

2019 ◽  
Vol 11 (12) ◽  
pp. 149
Author(s):  
Ishmael Radikoko ◽  
Shadreck A. Mutobo ◽  
Mphoeng Mphoeng
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Market Development ◽  
Series Data ◽  
Strong Positive Correlation ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Turnover Ratio ◽  
The Government ◽  
The Impact

This study examines the impacts of the stock market development on economic growth using Botswana as a case study. The study uses times series data covering a decade from 2006 to 2016. The method of analysis used is the Auto regressive distributed lag (ARDL) bounds model. The stock market capitalization ratio (MCR) was used as a proxy for market size while value of shares traded ratio (ST) and Turnover ratio (TR) were used as a proxy for liquidity, collectively representing stock market development. Real gross domestic product (GDP) growth rate was used to represent economic growth .The results show that market capitalization and turnover ratio have a negative correlation with economic growth, while the value of shares traded has a strong positive correlation with economic growth. This result implies that liquidity has propensity to stimulate economic growth in Botswana. The results of this study also found that there exists no causality relationship between stock market development and economic growth. The government should make policies that boost the interest of domestic investors in Botswana as this might spur investors’ interest and boost stock market activity which will improve liquidity and therefore stimulate economic growth.

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