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 Macroeconomic Indicators and Stock Market Development on Economic Growth: Empirical Evidence from ASEAN Countries

2020 ◽  
Vol 3 (4) ◽  
pp. 271
Author(s):  
Endah Dewi Purnamasari ◽  
Budi Setiawan ◽  
Muhammad Bahrul Ulum
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Stock Market ◽  
Real Interest Rate ◽  
The Philippines ◽  
Market Development ◽  
Stock Market Development ◽  
Macroeconomic Indicators ◽  
Asean Countries ◽  
The Impact

ASEAN region takes benefit from a great financial integration; however, this region has been subjected to external economic shock. This study focused on analyzing the impact of macroeconomic indicators and stock market development on economic growth in ASEAN countries (Indonesia, Malaysia, Singapore, Thailand, The Philippines, and Vietnam) for the period from 2008 to 2018. The panel data was employed to determine how market capitalization, turnover ratio, real interest rate, and inflation have impact on economic growth in ASEAN. This study revealed that all stock market development variables have positive impact on economic growth, but the correlation between real interest rate and inflation was negative. As a result, this study recommends that ASEAN authorities should focus on stock market development as well as control macroeconomic variables prudently to boost economic growth

scholarly journals Impact of Stock Market Development on Economic Growth: Evidence from Selected Sub‑Saharan African Countries

2019 ◽  
Vol 67 (4) ◽  
pp. 1071-1083
Author(s):  
Daniel Kwabena Twerefou ◽  
Emmanuel Abbey ◽  
Emmanuel A. Codjoe ◽  
Peter Saitoti Ngotho
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Stock Market ◽  
Direct Investment ◽  
Positive Impact ◽  
Sub Saharan Africa ◽  
Market Development ◽  
Stock Market Development ◽  
Sub Saharan ◽  
The Impact

This paper examines the impact of stock market development on economic growth in Sub‑Saharan Africa using a balanced panel data of five selected countries over the period 1993 – 2013 and the system generalised method of moments dynamic panel estimation framework. The paper finds a positive impact of stock market development proxied by the turnover ratio of domestic shares and market capitalization on economic growth though minimal. Furthermore, investment, lagged gross domestic product and human capital were found to have a significantly positive impact on growth while trade and foreign direct investment negatively impacted on growth, even though the results for foreign direct investment is not significant in all the models and consequently, not very robust. There should be policy measures aimed at enhancing economic growth using the development of the stocks market as a channel. Such policies should focus on developing the appropriate mix of taxation of investors as well as the development of requisite technology, institutional and regulatory framework that will facilitate an increase in the size and liquidity of the market in the sub‑region.

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.

scholarly journals Reviewing the Equilibrium and Causal Relationships between Stock Market Development and Economic Growth in Jordan

2019 ◽  
Vol 11 (12) ◽  
pp. 37
Author(s):  
Eyad M. Malkawi
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Developing Economies ◽  
Market Development ◽  
Causal Relationships ◽  
Stock Market Development ◽  
Ardl Approach ◽  
Show Evidence ◽  
The Relationship

The relationship between stock market development and economic growth has been diversely investigated by many researchers. This paper investigates the equilibrium and causal relationships between stock market development and economic growth in Jordan for the 1980-2018 period. It employs the ARDL approach and the results show evidence of a co-integration and causal relationships between variables. These results are broadly consistent with similar studies carried out for other developing economies.

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.

scholarly journals An Empirical Analysis of Stock Market Development and Economic Growth: The Case of Macedonia

2016 ◽  
Vol 11 (2) ◽  
pp. 71-81 ◽  
Author(s):  
Darko Lazarov ◽  
Emilija Miteva-Kacarski ◽  
Krume Nikoloski
Keyword(s):  
Economic Growth ◽  
Comparative Analysis ◽  
Stock Market ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Market Development ◽  
Stock Market Development ◽  
Republic Of Macedonia ◽  
The Republic

Abstract This paper has two goals. The first goal is to investigate the influence of stock market development on economic growth for a group of 14 transition economies from the Central and South-East European (CSEE) region in the period 2002-2012, while the second is to analyze the main characteristics and specificities of the stock market in the Republic of Macedonia. To fulfil the first goal, we apply panel regression models (fixed and random effects) and a dynamic panel model (Generalized Method of Moments – GMM), while we use a single country approach and comparative analysis to examine the main characteristics of the Macedonian stock market. The estimated results indicate that stock market development is positive and significantly correlated with economic growth. Additionally, the comparative analysis of the stock market in the Republic of Macedonia suggests that the Macedonian stock market is still underdeveloped and faces a number of challenges before it can enter a new phase of development after the negative impact of the global financial crisis. Those challenges include capital market regional integration and the harmonization of legal and institutional frameworks such as bankruptcy procedures, accounting and reporting standards, public sector regulatory bodies, corporate governance and a liberalized trade regime.

scholarly journals RELATIONSHIP BETWEEN THE STOCK MARKET DEVELOPMENT, BANKING SECTOR DEVELOPMENT AND ECONOMIC GROWTH IN THE CEE COUNTRIES

2021 ◽  
Vol 7 (3) ◽  
pp. 118-126
Author(s):  
Lidiya Yemelyanova
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Stock Markets ◽  
Banking Sector ◽  
Market Development ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Banking Sector Development ◽  
The Impact ◽  
Stock Market Capitalization

The stock markets of most CEE countries have been actively developing and improving over the past decades but they still do not belong to the developed markets according to MSCI classification, the financial systems of these countries tends towards the bank-oriented type. Does the level of stock market development affect economic growth in CEE countries and do these countries need to develop their stock markets accordingly? The purpose of this article is to identify the direction of the causal link between stock market development, banking sector development and economic growth in Central and Eastern European (CEE) countries. The subject of the research is the relationship between the stock market development, banking sector development and economic growth in the CEE countries. Methodology. The research is based on the annual data for two time periods 1999-2012 and 1999-2015 for the 8 and 5 CEE countries, respectively. The study is based on the Granger causality test and linear regression models. According to results of the research the stock market development plays an important role in attracting foreign direct investment and economic growth in CEE countries in the long-run period. There are revealed the channels of indirect influence of the stock market capitalization on the economic growth. Stock market capitalization has impact on the banking sector and gross capital formation, which in turn have impact on the economic growth of CEE countries. There is the impact of both the stock market and the banking sector development on the economic growth in CEE countries during 1999-2015. However, the impact of the stock market size on the economic growth is positive and the impact of domestic credit to private sector is negative. Practical implications. The study proves the reasonable need for the CEE countries to move towards further development of the stock market, improving the market infrastructure and institutional environment in order to expand the size of the stock market and thereby contribute to the economic growth of this countries. Value/originality. The obtained conclusion about the role of the stock market in economic growth and attraction of FDI is of great importance both for Ukraine and other countries with similar trajectory of economic development in general and similar historical aspects of the origin of stock markets in particular and should be taken into account by state leaders when making decisions on the need to create conditions for development of such element of the country’s financial system as the stock market.

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