scholarly journals The impact of stock market on enterprise capital structure in ASEAN developing countries

2021 ◽  
Vol 5 (1) ◽  
pp. 1359-1367
Author(s):  
Thuan Nguyen ◽  
Loc Tram ◽  
Nguyễn Thanh Liêm
Keyword(s):  
Developing Countries ◽  
Stock Market ◽  
Capital Structure ◽  
Statistical Significance ◽  
Market Development ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Negative Effect ◽  
The Impact ◽  
Stock Market Capitalization

Capital structure is one of the topics in which business managers as well as academics are always interested, because it has many important implications. This problem in developing countries is even more relevant due to the low level of financial development in these countries, leading to uncertain access to external capital by firms. This paper focuses on the impact of stock market development on capital structure in five developing countries in ASEAN, namely Indonesia, Malaysia, Philippines, Thailand and Vietnam, for the period 2010 - 2018. Stock market development is measured in four different ways: Stock market capitalization to GDP (MACAP), total value of shares traded to GDP (LIQ1), total value of shares traded to stock market capitalization (LIQ2) and average of the three indexes (STOCK). The results show that development of stock market has different impacts on capital structure, depending on the measures used to reflect the stock market development. Specifically, MACAP, LIQ2 and STOCK do not reach statistical significance, while LIQ1 has a negative effect. In addition, firm size (SIZE), tangible assets (TANG), growth opportunities (TOBINQ), inflation (INF) and GDP growth (GDPGR) positively affect capital structure; while firms' profit (ROA) has negative effect. Based on the research findings, the research offers several implications for relevant stakeholders.

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.

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.

Determinants of Stock Market Development in Southeast Asian Countries

2012 ◽  
pp. 101-112 ◽  
Author(s):  
Phan Dinh Nguyen ◽  
Hanh Vo Thi Ha
Keyword(s):  
Stock Market ◽  
Southeast Asian ◽  
Market Liquidity ◽  
Market Development ◽  
Asian Countries ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Negative Effect ◽  
Southeast Asian Countries ◽  
Macroeconomic Stability

This paper examines the determinants of stock market development in Southeast Asian countries. Our findings show that income growth rate, saving rate, financial development, stock market liquidity, and macroeconomic stability are the main determinants of market capitalization. Meanwhile macroeconomic stability meas- ured by the change in inflation and the financial crisis have had a negative effect on market capitalization, other variales have a potivive effect.

Stock Market Developmentand Economic Growth in Nigeria

2019 ◽  
Vol 9 (2) ◽  
pp. 232
Author(s):  
E. O. Ajayi ◽  
F. E. Araoye
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Market Development ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Independent Variables ◽  
Turnover Ratio ◽  
The Government ◽  
Stock Market Capitalization

This paper empirically analyzed the effect of the Nigerian Stock market capitalization on the nation’s economic growth from 1985 to 2010. The economic growth was proxy by the GDP while the stock market variable considered included; market capitalization and market turnover ratio as independent variables as proxy for stock market development in terms of size and liquidity. The paper establishes a unidirectional causality that runs from economic growth to stock market. The result shows that economic growth influences stock market capitalization while stock market capitalization does not influence economic growth. The result indicates that economic growth catalyses stock market in Nigeria. The government is therefore advised to put up measures to stem up investors’ confidence and activities in the market so that it could contribute significantly to the Nigerian economic growth.

scholarly journals Impact of Macroeconomic Variables on Capital Structure Choice: A Case of Textile Industry of Pakistan

2016 ◽  
Vol 55 (3) ◽  
pp. 227-239 ◽  
Author(s):  
Zia Ur Rehman .
Keyword(s):  
Stock Market ◽  
Capital Structure ◽  
Exchange Rates ◽  
Interest Rates ◽  
Public Debt ◽  
Market Development ◽  
Stock Market Development ◽  
Macroeconomic Variables ◽  
Gdp Growth Rate ◽  
The Impact

The financing decision of a firm is influenced by both internal (firm specific) and external (macroeconomic) factors. However, most of the empirical investigations have focus on internal factors whereas the impact of macroeconomic variables on capital structure decisions is somewhat under researched particularly in the context of developing countries. The aim of the study is to analyse the impact of macroeconomic variables on the capital structure decisions of all listed textile firms in Pakistan for the period 2004-2013. Panel data regression (fixed effects model) was used to estimate the effect of macroeconomic variables on capital structure. The findings of the study reveal that public debt, exchange rates and interest rates are negatively related whereas corporate taxes, stock market development, inflation rate and GDP growth rate are positively related with economic leverage. Moreover, the relationship of corporate taxes, stock market development and exchange rates is significant with the economic leverage. JEL Classification: E44, E52, E62, F31, G32 Keywords: Capital Structure, Interest Rates, Inflation, Public Debt, Exchange Rates, GDP Growth Rate, Stock Market Development, Pakistan

scholarly journals Does Insurance Development Affect Financial Market in Developing Countries?

2016 ◽  
Vol 3 (1) ◽  
pp. 136
Author(s):  
Relwendé Sawadogo ◽  
Samuel Guerineau
Keyword(s):  
Developing Countries ◽  
Stock Market ◽  
Financial Market ◽  
Market Development ◽  
Alternative Measure ◽  
System Quality ◽  
Endogeneity Bias ◽  
Stock Market Development ◽  
And Control ◽  
The Impact

This paper investigates the impact of insurance on stock market development in 37 developing countries over the period 1987-2011. By controlling for the potential endogeneity bias by System GMM estimator, we show that the insurance premiums significantly increase the stock market value traded. This result is robust to the use of alternative measure of stock market development and control of the political and legal system quality. In addition, the results highlight that an improvement in property rights promotes the deepening of the financial market. Thus, the results argue for insurance policies promoting and an improvement of the legal environment to benefit from the financial market development.

scholarly journals THE IMPACT OF DEPOSITARY RECEIPTS ON STOCK MARKET DEVELOPMENT: EVIDENCE FROM ORGANIZATION OF ISLAMIC COOPERATION STOCK MARKETS

2020 ◽  
Vol 10 (3) ◽  
pp. 130-138
Author(s):  
Norhazlina Ibrahim ◽  
Obiyathulla Ismath Bacha ◽  
Mansor H. Ibrahim ◽  
Hishamuddin Abdul Wahab
Keyword(s):  
Stock Market ◽  
Stock Markets ◽  
Market Development ◽  
Stock Market Development ◽  
Depositary Receipts ◽  
The Impact

scholarly journals BANKING INDUSTRY CONCENTRATION AND NET INTEREST MARGINS (NIMS) IN PAKISTAN

2013 ◽  
Vol 15 (2) ◽  
pp. 384-402 ◽  
Author(s):  
Ijaz Hussain
Keyword(s):  
Stock Market ◽  
Commercial Banks ◽  
Banking Sector ◽  
Operating Cost ◽  
Industry Concentration ◽  
Market Development ◽  
Stock Market Development ◽  
Interest Margins ◽  
The Impact ◽  
Bank Soundness

This paper uses bank level data of 26 commercial banks for the period 2001–2010 to explore determinants of net interest margins of commercial banks of Pakistan. Based on results of this study, past net interest margins, bank soundness, operating cost, industry concentration, relative market share, inflation, real depreciation and industrial growth have statistically significant and positive impact while diversification, change in bank size, lagged liquidity, stock market development have dampening effects on net interest margins. However, impact of ownership, GDP and credit market development is statistically insignificant. Our regression results suggest that stock market development as means of alternative source of finance contributes to reduction in net interest margins while the impact of banking sector development on breaking banking cartels and bringing net interest margins down had been insignificant. Exchange rate adjustments, rate of inflation and growth of the industry also cannot be ignored in management of net interest margins. Incentives for bank executives and managers to ensure efficiency in operating costs, reduction in the premium charged for bank soundness, diversification of bank activities and passing on the scale efficiencies to both depositors and borrowers can also play role to bring interest margins down to accelerate investment and growth in the country.

scholarly journals Does a country’s financial and legal systems contemporaneously impact the governance and performance relationship: Further evidence?

2012 ◽  
Vol 9 (4-3) ◽  
pp. 279-308 ◽  
Author(s):  
Anne Anderson ◽  
Parveen P. Gupta ◽  
Andrey Zagorchev
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Stock Market ◽  
Investor Protection ◽  
Legal Systems ◽  
Market Capitalization ◽  
And Performance ◽  
Continuous Measures ◽  
The Impact ◽  
Stock Market Capitalization

We investigate the impact of continuous measures of the financial system and investor protection on the corporate governance-performance relationship. We find that shareholder suits rights/stock market capitalization (disclosure rights/stock market capitalization) has monotonic (non-monotonic) relation with firm performance and that high-levels of stock market capitalization and investor protection generate valuation synergies. Besides interactions of financial and legal systems with corporate governance, market- (bank-) orientation and development and stronger (weaker) investor protection along with better (worse) corporate governance are associated with higher (lower) valuations. A country’s migration to a developed stock market with enhanced investor protection is related to better corporate governance and firm performance.

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).

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