scholarly journals Stock Market and Economic Development: a Causality Test

2007 ◽  
Vol 3 (1) ◽  
pp. 36-44 ◽  
Author(s):  
Surya Bahadur G.C. ◽  
Suman Neupane
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Stock Market ◽  
Time Series Data ◽  
Series Data ◽  
Causality Test ◽  
Stock Market Development ◽  
Business Studies ◽  
Long Run ◽  
Made In

ABSTRACT An attempt has been made in this paper to examine the existence of causality relationship between stock market and economic growth based on the time series data for the year 1988 to 2005 using Granger causality test. The study finds the empirical evidence of long-run integration and causality of macroeconomic variables and stock market indicators even in a small capital market of Nepal. The causality has been observed only in real terms but not in nominal variables. In econometric sense, it depicts that the stock market plays significant role in determining economic growth and vice versa. Interestingly, the causation is evident with a lag of 3 to 4 years. Also, the paper reveals the importance of stock market development for fostering economic development. Journal of Nepalese Business Studies 2006/III/1 pp. 36-44

A Sectoral Analysis of the Role of Stock Market Development on Economic Growth: Empirical Evidence from Indian Economy

2017 ◽  
Vol 18 (4) ◽  
pp. 911-923 ◽  
Author(s):  
Madhu Sehrawat ◽  
A.K. Giri
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Stock Prices ◽  
Stock Price ◽  
Time Series Data ◽  
Trade Openness ◽  
Series Data ◽  
Causality Test ◽  
Long Run ◽  
Short Run

The present study examines the relationship between Indian stock market and economic growth from a sectoral perspective using quarterly time-series data from 2003:Q4 to 2014:Q4. The results of the autoregressive distributed lag (ARDL) approach bounds test confirm the existence of a cointegrating relationship between sector-specific gross domestic product (GDP) and sector-specific stock indices. The empirical results reveal that sector-specific economic growth are significantly influenced by changes in the respective sector-specific stock price indices in the long run as well as in the short run. Apart from that, the control variables, such as trade openness and inflation, act as the instrument variables in explaining the variations in the sector-specific GDP of the economy. The results of Granger causality test demonstrate unidirectional long-run as well as short-run causality running from sector specific stock prices to respective sector GDP. The findings suggest that economic growth of the country is sensitive to respective sub-sector stock market investments. The findings highlight the reasons for cyclical and counter-cyclical business phase for the overall economy.

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 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, foreign capital inflows and economic growth in Zimbabwe: A multivariate causality test

2012 ◽  
Vol 9 (2) ◽  
pp. 313-322
Author(s):  
Kunofiwa Tsaurai ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Time Series Data ◽  
Capital Inflows ◽  
Market Development ◽  
Series Data ◽  
Causality Test ◽  
Stock Market Development ◽  
Foreign Capital Inflows ◽  
Variable Bias

In this study we examine the dynamic nexus between stock market development and economic growth – using time-series data from Zimbabwe. The causal relationship between stock market development and economic growth has been a subject of extensive debate in recent years. In an attempt to address the omission-of-variable bias, which has not been addressed by many previous studies, we have incorporated savings as a third variable in the bivariate setting between stock market development and economic growth – thereby creating a multivariate simulation. The study uses the Johansen–Juselius (Johansen and Juselius, 1990) (maximum likelihood) and a dynamic specification model to examine this linkage. The empirical results reveal that there is a distinct causal flow from stock market development to economic growth – without any feedback in Zimbabwe. The results also show that there is a unidirectional causal flow from savings to economic growth, and from stock market development to savings.

scholarly journals The Nexus between Export and Economic Growth in Tanzania

2019 ◽  
Vol 1 (2) ◽  
pp. p95
Author(s):  
Romanus L. Dimoso (PhD, Economics) ◽  
UTONGA, Dickson (MSc. Economics)
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Series Data ◽  
Test Results ◽  
Causality Test ◽  
Goods And Services ◽  
Long Run ◽  
Causality Tests ◽  
The Government ◽  
Econometrics Analysis

This study explored the causal relationship between exports and economic growth in Tanzania. It analyzed time series data for the period of 1980 to 2015. Economic growth is measured in terms of growth per cent while exports are measured in percentage change of goods and services sold abroad. Econometrics analysis was employed in the due course. Such procedures as testing for the presence of unit root, co-integration and causality were done. Furthermore, the Johansen co-integration and Granger causality tests were employed to examine the long-run relationship among variables. The results of co-integration indicate the existence of one co-integrating equation. The causality test results exhibited causality which runs from economic growth to exports. The results conclude that, in the long run, there is a relationship between exports and economic growth in Tanzania. This study recommends the Government to make efforts to improve exports and eventually, in the long-run, rejuvenating the economy.

scholarly journals Impact of Stock Market Development on Economic Growth in BRICS

2018 ◽  
Vol 10 (1) ◽  
pp. 23
Author(s):  
Godfrey Osaseri ◽  
Ifuero Osad Osamwonyi
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Stock Market ◽  
World Bank ◽  
Time Series Data ◽  
Market Development ◽  
Series Data ◽  
Stock Market Development ◽  
Development Indicators ◽  
Effect Estimation

The study examines Stock Market development and economic growth in BRICS, Quarterly time series data for the period 1994QI to 2015Q4 were sourced from World Bank Indicator. The Panel Least Squares based on the fixed effect estimation was employed to determine how stock market development impacts on the economic growth of BRICS. Diagnostics tests were conducted to ascertain the robustness and stability of the regression results. The findings reveal that stock market development exerts significant impact on the economic growth. The study revealed that there is a positive correlation between stock market development indicators and BRICS’s economic growth. The study recommends that the weakness of each of the BRICS member country should be taken as policy focus and strategies necessary to strengthen them should be swiftly applied by the governments.

scholarly journals DOES STOCK MARKET DEVELOPMENT PLAY ANY ROLE IN THE EFFECT OF FDI ON ECONOMIC GROWTH IN NIGERIA? AN EMPIRICAL INVESTIGATION

2016 ◽  
pp. 51-61
Author(s):  
Oziengbe Scott Aigheyisi
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Time Series Data ◽  
Ordinary Least Squares ◽  
Growth Effect ◽  
Market Development ◽  
Series Data ◽  
Domestic Investment ◽  
Government Consumption ◽  
Stock Market Development

The objective of the paper is to investigate whether stock market development plays any role in the effect of foreign direct investment (FDI) on economic growth in Nigeria. Using annual time series data that span the period from 1981 to 2014, and employing the fully modified ordinary least squares (FMOLS) estimation technique, the empirical evidence indicates that FDI, domestic investment and stock market development positively and significantly affect economic growth, but the effect of the interaction between stock market development and FDI on economic growth is negative and significant, indicating that the Nigerian bourse is not yet fully developed to engender positive growth effect of FDI. The study further finds that government consumption expenditure and trade openness adversely affect the growth of the country’s real GDP per capita. Recommendations of the paper include efforts by the government to design and implement programmes and policies aimed at enhancing the attractiveness of the country to foreign and local investors, efforts by capital market regulators to enhance stock market efficiency, reduction of government consumption expenditures and import control.

scholarly journals Impact of Economic Reforms, FDI and Imports on GDP: Trends and Regression Analysis

2018 ◽  
Vol 7 (3) ◽  
pp. 20-25
Author(s):  
Preeti Sharma ◽  
Priyanka Sahni
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Time Series Data ◽  
Economic Reforms ◽  
Chinese Economy ◽  
Series Data ◽  
Causality Analysis ◽  
Causality Test ◽  
Long Run ◽  
Integration Test

The aim of this study is to explore the causal relationship between the exports, imports and economic growth of Chinese economy using time series data running from 1978 to 2016.Co integration, Granger Causality analysis and Vector Error Correction Mechanism (VECM) has been used in order to test the hypotheses about the presence of causality and co integration among the variables. The co integration test confirmed that exports, imports and GDP are co integrated, indicating an existence of long run equilibrium relationship among the variables and also confirmed by the Johansen co integration test results. The Granger causality test finally confirmed the presence of bi-directional causality between exports, imports and GDP. The study further shows that relative share of china’s exports in world exports has increased significantly after the introduction of economic reforms. Further, the rising exports have also made a significant contribution to the economic growth of Chinese economy due to forward and backward linkages.

scholarly journals Impact of Women Education on Economic Growth: An Evidence from Pakistan

2021 ◽  
Vol 3 (2) ◽  
pp. 113-120
Author(s):  
Kiran Zahra ◽  
Mudassar Yasin ◽  
Baserat Sultana ◽  
Zulqarnain Haider ◽  
Raheela Khatoon
Keyword(s):  
Higher Education ◽  
Economic Growth ◽  
Economic Development ◽  
Time Series Data ◽  
Essential Element ◽  
Series Data ◽  
Education Expenditure ◽  
Long Run ◽  
The Government ◽  
The Impact

Education is the most fundamental right in the current situation, and it is an essential element of economic growth. No country can achieve economic development and goals without investing in education. Pakistan’s economic development is possible when education is equal for both men and women, but the government did not give importance to the sector as it deserved. This study investigated the determinants of female higher education in Pakistan and the impact of women's education on the economic growth of Pakistan. This study utilized time-series data from 1991 to 2019. The autoregressive distribution lag (ARDL) model is applied to estimate the impact. The result shows that in Pakistan, education expenditure has no positive effect on female education. In contrast, a positive relationship between female higher education and GDP growth exists, but this relation is not strong in the short run and long run.

INCOME EQUALITY IN A COURSE OF INDONESIAN DEVELOPMENT

2014 ◽  
Vol 59 (01) ◽  
pp. 1450006
Author(s):  
SUSUMU HONDAI
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Economic Development ◽  
Poverty Reduction ◽  
Time Series Data ◽  
Series Data ◽  
Income Equality ◽  
Left Behind ◽  
Long Run ◽  
Run Time

Indonesia has done remarkably well in the areas of both economic growth and poverty reduction. However, the economic situations differ significantly among Indonesian provinces. Some provinces have already developed well, while the rest have been left behind. The variation in the situations will generate a synthetic long-run time series data of economic development as a whole and enable us to find out when income equality starts to improve in a course of economic development.

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