scholarly journals IMPACT OF STOCK MARKET DEVELOPMENT ON ECONOMIC GROWTH: EMPIRICAL EVIDENCE

Globus ◽  
2020 ◽  
Author(s):  
T.M. Aliyev
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Stock Market ◽  
Direct Investment ◽  
Granger Causality Test ◽  
Market Liquidity ◽  
Market Development ◽  
Causality Test ◽  
Stock Market Development ◽  
Oil Sector

Development of non-oil sector of Azerbaijan was always one of the main priorities of the government. Oil sector of the economy was well developed since Azerbaijan got its independence, but in order to use the oil source more effectively it was determined to diversify the funds into non-oil sector of the economy, which in the end gave huge boost to most industries of the economy and led to increase of foreign direct investment. However, another source of the foreign direct investment and investor attraction – stock markets, were not developed and organized properly up until 1998, which was mainly due to outdated procedures left from USSR, absence of principles, methodology and understanding of how stock market can play huge role in expansion of economy and attraction of foreign investment. Nowadays, Azerbaijan has all possibilities to widen the stock market, enable easy way of increasing number of small businesses, startups and open the doors for them to global economy and lead to speedy expansion of the businesses. This research analyses the possible relationship between stock market development and economic growth, in order to predict possibility of positive impact of stock market on economic growth, overall social economic welfare of the country and business environment. For the purposes of the research, statistical figures of the country`s main economic indexes were collected: gross domestic product value, foreign direct investment value, stock market liquidity and turnover values, which were then analyzed and tested on various levels of cointegration test, Granger Causality test, vector error correction model and etc. All the analysis were done on statistical software Stata 11 based on figures of 1998-2016. The outcome of the Johansen-Julius shows existence of cointegration and by that VECM test proves relationship between stock market and economic growth in long run, while Wald Test confirms correction of this growth in short term by given explanatory variables. Hence, Granger causality test is conducted further, which determines bidirectional relationship between 3 variables: foreign direct investment, GDP and LIQ (stock market liquidity level). Based on the outcome of the analysis, study concludes that expansion of stock market and increase in foreign direct investment will have chain effect which leads to economic growth and social welfare in Azerbaijan.

scholarly journals Stock market and foreign direct investment in Zimbabwe

2014 ◽  
Vol 4 (2) ◽  
pp. 54-60
Author(s):  
Kunofiwa Tsaurai
Keyword(s):  
Foreign Direct Investment ◽  
Stock Market ◽  
Host Country ◽  
Direct Investment ◽  
Multinational Firms ◽  
Market Development ◽  
Causality Test ◽  
Stock Market Development ◽  
Long Run ◽  
Causality Relationship

This study investigates the causality relationship between stock market and foreign direct investment. The subject has been contentious in recent years with three theoretical rationales emerging. The first being that FDI net inflows boost stock market by increasing the amount of funds into the host country’ economy. The second suggests that FDI inflows forces the host country government to embrace market friendly policies, regulations and controls that end up boosting stock market. The third theoretical rationale mentions that well-developed and functioning stock markets attracts FDI as multinational firms perceive such a market as a friendly environment whose government is more open to the international community. Using the bi-variate causality test framework, this study discovered that there exists a long run relationship between stock market and FDI net inflows in Zimbabwe. However, the direct causality relationship from either stock market to FDI or from FDI to stock market development could not be found. This implies that stock market development and FDI net inflows in Zimbabwe are indirectly related to each other via some factors whose investigation should be a subject of another research.

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 RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT AND STOCK MARKET DEVELOPMENT IN A SMALL SOUTHERN AFRICA ECONOMY

2020 ◽  
Vol 17 (2) ◽  
Author(s):  
Duduzile Ngobe ◽  
◽  
Emenike Kalu ◽  
Keyword(s):  
Foreign Direct Investment ◽  
Stock Market ◽  
Capital Market ◽  
Direct Investment ◽  
Market Development ◽  
Causality Test ◽  
Stock Market Development ◽  
Money Market Funds ◽  
Long Run ◽  
Short Run

This paper investigates the relationship between foreign direct investment and stock market development in a small southern African economy. Specifically, the paper analyses long-run, short-run and causal relationships between foreign direct investment and stock market development in Eswatini for the 1990 to 2018 periods. Results of preliminary analyses of the variable show existence of positive skewness, fat-tailed, non-normal distribution, and I(1) order of integration for the foreign direct investment and stock market return series. Estimates from the ARDL model indicate evidence of a positive and statistically insignificant long-run relationship between foreign direct investment and stock market development in the kingdom of Eswatini. But in the short-run, there exist no relationship between foreign direct investment and stock market development in Eswatini. Estimates from Granger causality test do not show any evidence of causal relationship between foreign direct investment and stock market development in Eswatini. We recommend amongst others that capital market authorities should establish measures to increase the number of listings in the market so as boost investment options. In addition, there should be massive domestic investor-education on benefits of financing projects with a combination capital market funds, which has long-term tenor, and money market funds, which are of short-term nature.

scholarly journals Stock Market Development And Economic Growth: Evidence From Pakistan

2021 ◽  
Vol 4 (2) ◽  
pp. 9-26
Author(s):  
MUHAMMAD KAMRAN ◽  
DR. MUHAMMAD ZAHID ◽  
SAID WALI ◽  
KAMRAN RIZWAN
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Stock Market ◽  
Direct Investment ◽  
Trade Openness ◽  
Least Square ◽  
Market Development ◽  
Stock Market Development ◽  
Ordinary Least Square ◽  
The Government

The key motive of this research is to explore the role of stock markets in economic growth in Pakistan for the span of 2000 to 2017 by using the Ordinary Least Square (OLS) and fully Modified Ordinary Least Square approach (FMOLS). The research explored the stock market development and economic growth association by employing the two significant measures of the stock market development, that is the size (DSIZE) and liquidity (DLIQ) of the market accompanied with Foreign Direct Investment (DFDI) and Stock Market Capitalization (DSMC). The outcomes reveal that the included independent variables have a positive effect on the dependent variable i. e. DGDP except for liquidity which has no significant effect on DGDP. It is expected that the findings of the investigation can be utilized by the government for destined follow-up and reassessment of economic development programs in Pakistan. The influential policy suggestion was the attraction of the Foreign Direct Investment and trade openness by exploring their major determinants and also focus on the positive relationship variables

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.

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