scholarly journals ICT Adoption and Stock Market Development in Africa: An Application of the Panel ARDL Bounds Testing Procedure

2021 ◽  
Vol 14 (12) ◽  
pp. 601
Author(s):  
Jerry Ikechukwu Igwilo ◽  
Athenia Bongani Sibindi
Keyword(s):  
Stock Market ◽  
Causal Relationship ◽  
Testing Procedure ◽  
The Body ◽  
Market Development ◽  
Bounds Testing ◽  
Stock Market Development ◽  
Panel Ardl ◽  
Ardl Bounds Testing ◽  
Ict Adoption

The nexus between Information Communication Technology (ICT) and stock market development has been predominantly based on studies of the developed markets and high-income economies of the world. The objective of this study was to examine the causal relationship between ICT adoption and stock market development in Africa. The study examined a panel of 11 African stock exchanges for the period 2008–2017 and employed the panel ARDL bounds testing procedure to test for cointegration and examine the causal relationship between ICT adoption and stock market development. The dependent variable employed was the stock market development index (FINDEX), while the independent variable was the ICT adoption index (ICTDEX), and the financial freedom index (FFI) was employed as a control variable. Firstly, the results of the study documented that the variables are cointegrated in the long term. Secondly, the results of the study documented a bi-directional causal relationship (complementarity) between ICT adoption and stock market development. In essence, ICT adoption and stock market development reinforce each other. Thirdly, the study established a causal relationship running from financial freedom to stock market development. This lends credence to the notion that financial market deregulation promotes stock market development. Lastly, a positive causal relationship that ran from financial freedom to stock market development was documented. This study contributes to the body of knowledge in the sense that it is the first study to examine the phenomenon of the ICT–stock market development nexus by employing a panel study. Hitherto, studies were mainly country-specific in nature. The findings of the research imply that policymakers should be more resolute when formulating ICT policies, as ICT adoption can drive stock market development and vice versa for better economic growth. Policymakers should embrace policies that support the deregulation of stock markets as this will lead to the development of the latter.

scholarly journals Capital market development and economic growth: Empirical evidence from South Africa

2011 ◽  
Vol 8 (2) ◽  
pp. 217-226 ◽  
Author(s):  
Nicholas Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Stock Market ◽  
Causal Relationship ◽  
Testing Procedure ◽  
Market Development ◽  
Bounds Testing ◽  
Stock Market Development ◽  
Real Gdp Per Capita ◽  
Market Capitalisation

In this paper, the dynamic causal relationship between stock market development and economic growth in South Africa is examined – using the newly developed ARDL-Bounds testing procedure. The study uses three proxies of stock market development, namely stock market capitalisation, stock market traded value and stock market turnover, against real GDP per capita, a proxy for economic growth. Using the 1971-2007 data sets, the empirical results of this study show that the causal relationship between stock market development and economic growth is sensitive to the proxy used for measuring the stock market development. When the stock market capitalisation is used as a proxy for stock market development, the economic growth is found to Granger-cause stock market development. However, when the stock market traded value and the stock market turnover are used, the stock market development seems to Granger-cause economic growth. Overall, the study finds the causal flow from stock market development to economic growth to predominate. The results apply irrespective of whether the causality is estimated in the short-run or in the long-run.

scholarly journals Macroeconomic Drivers of Stock Market Development: Evidence From Jordan

2018 ◽  
Vol 9 (3) ◽  
pp. 117
Author(s):  
Alaaeddin Al-Tarawneh ◽  
Ghazi Al-Assaf
Keyword(s):  
Stock Market ◽  
Banking Sector ◽  
Testing Procedure ◽  
Market Development ◽  
Bounds Testing ◽  
Stock Market Development ◽  
Macroeconomic Variables ◽  
Long Run ◽  
Development Indicator ◽  
Short Run

This paper investigates the macroeconomic drivers of the stock market development in Jordan during the period 1978-2016. The macroeconomic variables are represented by remittance inflows, investment, banking sector development, and level of income. The paper employs the ARDL bounds testing procedure to estimate the potential short run and long run relationships between the stock market development indicator and macroeconomic variables. The empirical results show that the macroeconomic variables positively and significantly affect the development of stock market in Jordan, except remittances which has a negative effect on the stock market development indicator. All signs and magnitudes are consistent with the literature.

scholarly journals Are Banks And Stock Markets Positively Related? Empirical Evidence From South Africa

2010 ◽  
Vol 26 (6) ◽  
Author(s):  
Nicholas M Odhiambo
Keyword(s):  
South Africa ◽  
Stock Market ◽  
Stock Markets ◽  
Real Income ◽  
Market Development ◽  
Bounds Testing ◽  
Critical Question ◽  
Stock Market Development ◽  
Long Run ◽  
Short Run

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><a name="OLE_LINK2"></a><a name="OLE_LINK1"><span style="mso-bookmark: OLE_LINK2;"><span style="color: black; font-size: 10pt; mso-themecolor: text1;" lang="EN-GB"><span style="font-family: Times New Roman;">In this study, we examine the relationship between banks and stock market development in South Africa.<span style="mso-spacerun: yes;">&nbsp; </span>The study attempts to answer one critical question: Are banks and stock markets positively related in South Africa? The bank development is proxied by the ratio of the domestic credit to the private sector to GDP (DCP/GDP), while the stock market development is proxied by the ratio of the stock market capitalisation to GDP (CAP/GDP).Unlike the majority of the previous studies, the current study uses the newly introduced ARDL-Bounds testing approach, as proposed by Pesaran<span style="mso-spacerun: yes;">&nbsp; </span>et al. (2001), to examine this linkage. The empirical results show that there is a distinct positive relationship between banks and stock markets in South Africa. The results apply irrespective of whether the model is estimated in the short run or in the long run. <span style="mso-bidi-font-style: italic;">Other results show that in the short run, the stock market development in South Africa is positively determined by the level of savings, but negatively affected by the rate of inflation and the lagged values of the stock market development. However, in the long run, the stock market is positively determined by real income and the inflation rate. </span><span style="mso-spacerun: yes;">&nbsp;</span></span></span></span></a></p>

Does Stock Market Development Promote Economic Growth in Botswana?

2020 ◽  
pp. 1-6
Author(s):  
Erasmus L Owusu ◽  
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Negative Impact ◽  
Market Development ◽  
Financial Deepening ◽  
Bounds Testing ◽  
Stock Market Development ◽  
Long Run ◽  
Stock Value ◽  
Market Capitalisation

This paper examines the empirical linkage between stock market development and sustainable economic growth in Botswana. The paper employs AutoRegression Distributed lags (ARDL)-bounds testing approach and multi-dimensional stock market development proxies to examine this relationship. The paper finds that in the long run, stock market development has a minimal and negative impact on economic growth in Botswana. However, stock market development, especially, market capitalisation development has some short-term impact on economic growth. The paper, however, failed to any impact of stock value traded and the stock value turnover on economic growth. This finding supports the numerous past studies, which have reported negative or inconclusive results on the effects of stock market development on economic growth. The paper, therefore, concludes that there is the need for increasing financial deepening and the reform and diversification of the ownership structure of the capital markets by providing further public and institutional education on the value of stock markets for economic development

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