scholarly journals Fiscal Policy and Stock Market Development in an Emerging West African Economy

2020 ◽  
Vol 2 (3) ◽  
pp. 52-68
Author(s):  
Dr. Paschal Chikwado Nwakobi ◽  
Amalachukwu Ananwude ◽  
Chinedu Maurice Umezurike
Keyword(s):  
Fiscal Policy ◽  
Stock Market ◽  
West African ◽  
Market Development ◽  
Fiscal Deficit ◽  
Total Expenditure ◽  
Causality Analysis ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Turnover Ratio

Purpose: This article presents a study on the effect of fiscal policy on stock market development in an emerging West African economy with an emphasis on Nigeria for the period of 1986 to 2018. Specifically, we evaluated the effect of fiscal deficit on all share index including government total expenditure on market capitalization ratio, the value of stock traded, and turnover ratio using data from the Central Bank of Nigeria (CBN) and Nigerian Stock Exchange (NSE). Methods: The Auto-regressive Distributive Lag (ARDL) was the estimation technique employed in ascertaining the nature of the short-run relationship between fiscal policy and stock market development indices, whereas the effect of fiscal policy on stock market development was actualized under the granger causality analysis. Results: The result of the analysis revealed that fiscal deficit has no significant effect on all share index; government total expenditure has no significant effect on stock market capitalization ratio; government total expenditure has a significant effect on the value of stock traded ratio; government total expenditure has no significant effect on the stock market turnover ratio. Implication: Government should implement its fiscal policies to carefully accommodate the development of the stock market, as changes in fiscal policy affect the overall activities in the market and ultimately the economy.

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.

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 Stock Market Development and Economic Growth in India

2014 ◽  
Vol 3 (3) ◽  
pp. 30-46 ◽  
Author(s):  
Srinivasan Palamalai ◽  
Karthigai Prakasam
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Economic Activity ◽  
Positive Influence ◽  
Market Development ◽  
Stock Market Development ◽  
Development Indicators ◽  
Turnover Ratio ◽  
Long Run ◽  
Market Capitalisation

The link between stock market development and economic activity has always been the subject of considerable debate in the field of economics and it raises empirical question whether stock market development influences economic activity or whether it is a consequence of increased economic activity. This study attempts to investigate the direction of causality between stock market development and economic growth in the Indian context. Using the cointegration and causality tests for the period June 1991 to June 2013, the study confirms a well defined long-run equilibrium relationship between the stock market development indicators and economic growth in India. The empirical results show bidirectional causality between market capitalisation and economic growth and unidirectional causality from turnover ratio to economic growth in the long-run and short-run. By and large, it can be inferred that the stock market development indicators viz. market capitalisation and turnover ratio have a positive influence on economic growth in India.

scholarly journals The Dynamics Of Stock Market Development In Kenya

2013 ◽  
Vol 30 (1) ◽  
pp. 73 ◽  
Author(s):  
Sheilla Nyasha ◽  
N. M. Odhiambo
Keyword(s):  
Stock Market ◽  
Stock Exchange ◽  
Market Development ◽  
Regulatory Body ◽  
Trading System ◽  
Stock Market Development ◽  
Turnover Ratio ◽  
Open Outcry ◽  
Market Capitalisation ◽  
Exchange Control

This paper highlights the origin of the stock market in Kenya, and traces the reforms that have been undertaken to develop the stock market. It also highlights the growth of the Kenyan stock market, as well as the challenges currently facing the market. The country has one stock market, known as the Nairobi Securities Exchange (formerly the Nairobi Stock Exchange). It is one of Africas largest stock markets. Since the early 1980s, a number of stock market reforms have been implemented in Kenya. These include the formation of a regulatory body (Capital Markets Authority CMA) in 1989, the replacement of the "Call-Over" trading system by the floor-based "Open-Outcry System" in 1991, the reduction of listing costs, the relaxation of the exchange control for locally controlled companies, and the repeal of the Exchange Control Act. Following these reforms, Kenyas stock market has developed significantly in terms of market capitalisation, the total value of stocks traded, and the turnover ratio. Although the stock market in Kenya has developed over the years, like many other developing countries' markets, it still faces a number of wide-ranging challenges.

scholarly journals Applying the vector error correction model (VECM) to analyze the relationship between economic growth and stock market development in Vietnam

2014 ◽  
Vol 17 (2) ◽  
pp. 73-84
Author(s):  
Nhung Thi Phuong Nguyen
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Granger Causality ◽  
Market Development ◽  
Vector Error Correction Model ◽  
Correction Model ◽  
Stock Market Development ◽  
Vector Error Correction ◽  
Turnover Ratio ◽  
Vector Error

The paper researchs the cause-effect relationship between economic growth and stock market development in Vietnam by using vector error correction model (VECM). The results prove that there is a long-term relationship between Vietnamese economic growth and its stock market. Besides, the Granger causality test illustrates that there exists a unidirectional relationship which Vietnamese stock maket development will cause Granger - causality to the economic growth. Thanks to its market capitalization size, Vietnamese stock market performs its role in funding for the economy. But there is not enough evidence to conclude that the stock market’s liquidity and turnover ratio can cause Granger causality to its economic growth. The other findings show that there is only a small contribution ratio of the stock market to the economic growth by using variance decomposition of GDP. Finally, the paper also suggests some policies for Vietnamese Government in improving the stock market’s liquidity and turnover ratio to contribute to the economy in the future.

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.

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 Development and Economic Growth: Empirical Evidence from Nepal

2021 ◽  
pp. 097215092110168
Author(s):  
Jeevan Kumar Bhattarai ◽  
Ramji Gautam ◽  
Keshab Khatri Chettri
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Time Series Data ◽  
Control Variable ◽  
Market Development ◽  
Series Data ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Testing Procedures ◽  
Distributed Lag

This study examines the relationship between stock market development and economic growth in Nepal by employing autoregressive distributed lag (ARDL) model with bound testing procedures. The study period covers annual time series data from 1994 to 2019. Indicators of the stock market development used are size, depth and efficiency represented by market capitalization as a percentage of gross domestic product (GDP), total value of shares traded as a percentage of GDP and total shares traded as a percentage of market capitalization, respectively. Following high correlations among these indicators, an aggregated index is constructed and used in the study. Real GDP per capita growth is taken as an economic growth indicator. The results suggest that there exists a long-run uni-directional causality relationship running from stock market development index to economic growth. Stock market size and liquidity are significant contributors, showing that stock market is able to mobilize capital and diversify risks with increased easiness in trading of stocks. The control variable market inflation shows no significant impact on either of the examined primary variables.

Sign in / Sign up

Export Citation Format

Share Document