scholarly journals Inflation Thresholds and Stock Market Development: Evidence of the Nonlinear Nexus From an Emerging Economy

2019 ◽  
Vol 11 (1) ◽  
pp. 447
Author(s):  
Noura Abu Asab ◽  
Alaaeddin Al-Tarawneh
Keyword(s):  
Stock Market ◽  
Inflation Rate ◽  
Threshold Model ◽  
Threshold Level ◽  
Market Development ◽  
Threshold Effects ◽  
Stock Market Development ◽  
Estimation Techniques ◽  
Positive Effects ◽  
The Relationship

The paper examines the existence of threshold effects in the relationship between inflation and stock market development in Jordan. It hypothesizes that inflation rate has positive effects on the market development before it reaches a certain level. A controlled threshold model is estimated over annul period from 1980 to 2018. We provide evidence that the nexus between inflation and stock market development is nonlinear and the inflation threshold is detected at 1.6%. The association is found positive before the threshold level but negative beyond it. However, the inflation-stock market development relationship flattens out significantly for inflation above 6%. These findings are robust to alternative estimation techniques.

scholarly journals The macroeconomic drivers of stock market development: evidence from Hong Kong

2019 ◽  
Vol 12 (2) ◽  
pp. 185-207 ◽  
Author(s):  
Sin-Yu Ho ◽  
Nicholas M. Odhiambo
Keyword(s):  
Hong Kong ◽  
Stock Market ◽  
Inflation Rate ◽  
Banking Sector ◽  
Trade Openness ◽  
Market Development ◽  
Content Type ◽  
Stock Market Development ◽  
Banking Sector Development ◽  
Short Run

Purpose The purpose of this paper is to examine the macroeconomic drivers of stock market development in Hong Kong during the period 1992Q4-2016Q3. Specifically, it investigates the impact of banking sector development, economic growth, inflation rate, exchange rate, trade openness and stock market liquidity on stock market development. Design/methodology/approach This paper uses quarterly time-series data covering the period 1992Q4-2016Q3, which have been obtained from various reliable sources. The study uses the autoregressive distributed lag bounds testing procedure to identify both the long- and short-run macroeconomic drivers of stock market development in Hong Kong. Findings We find that banking sector development and economic growth have positive impacts on stock market development, whereas the inflation rate and the exchange rate have negative impacts on stock market development both in the long and short run. In addition, the results show that trade openness has a positive long-run impact but a negative short-run impact on stock market development. Originality/value Despite the phenomenal growth of stock market in Hong Kong, there are, to the best of the authors’ knowledge, no relevant studies on the macroeconomic drivers of stock market development in Hong Kong. Therefore, this paper endeavours to enrich the literature by examining the macroeconomic drivers of stock market development in Hong Kong during the period 1992Q4-2016Q3.

scholarly journals Reviewing the Equilibrium and Causal Relationships between Stock Market Development and Economic Growth in Jordan

2019 ◽  
Vol 11 (12) ◽  
pp. 37
Author(s):  
Eyad M. Malkawi
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Developing Economies ◽  
Market Development ◽  
Causal Relationships ◽  
Stock Market Development ◽  
Ardl Approach ◽  
Show Evidence ◽  
The Relationship

The relationship between stock market development and economic growth has been diversely investigated by many researchers. This paper investigates the equilibrium and causal relationships between stock market development and economic growth in Jordan for the 1980-2018 period. It employs the ARDL approach and the results show evidence of a co-integration and causal relationships between variables. These results are broadly consistent with similar studies carried out for other developing economies.

scholarly journals Effects of Stock Market Development on Economic Growth in Nepal

2019 ◽  
Vol 8 ◽  
pp. 87-96
Author(s):  
Krishna Babu Baral
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Stock Exchange ◽  
Secondary Data ◽  
Market Development ◽  
Stock Market Development ◽  
Simple Regression Model ◽  
Analytical Research ◽  
Ministry Of Finance ◽  
The Relationship

Financial intermediaries and stock markets are important for the economic growth. The relationship between stock market development and economic growth has been extensively studied in the recent years. This study used analytical research design that involves bi-variate analysis by using simple regression model to examine the relationship between stock market development (measured by size and liquidity of the stock market) and economic growth (measured by logarithm of capital GDP at constant price) in Nepal during the period 2007-2017. Secondary data were collected from the official websites of Ministry of Finance (MoF) and Nepal Stock Exchange (NEPSE). It is assumed that economic growth is the function of stock market development for the purpose of data analysis. Empirical results of this study indicate significant positive relationship between economic growth and stock market development. Moreover, stock market development explained considerable variations in economic growth of Nepal i.e. size of the stock market explained 57.7 percent, and liquidity of the stock market explained 41.6 percent variation in economic growth of Nepal.

scholarly journals Exploring the causality between economic growth, financial development and inflation in sixteen high-income countries

2021 ◽  
Vol 22 (45) ◽  
Author(s):  
José Alberto Fuinhas ◽  
Matheus Koengkan ◽  
Matheus Belucio
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Banking Sector ◽  
High Income ◽  
Market Development ◽  
Impulse Response Functions ◽  
Vector Autoregressive ◽  
Stock Market Development ◽  
Banking Sector Development ◽  
The Relationship

This paper examined the relationship between economic growth, inflation, stock market development, and banking sector development for a panel of sixteen high-income countries for the period from 2001 to 2016, by using the mechanism impulse response functions and Granger causality tests derived from a panel vector autoregressive model. The evidence of bidirectional causality between all variables in the model was found. Overall, feedback and supply-leading theories have been confirmed in the literature. A plus sign in the relationship between the development of the banking sector and the stock market with economic growth was found. Therefore, stock market development and banking sector development stimulate the economy.

scholarly journals Threshold Effects of Import Dependence on Economic Growth in Nigeria

2021 ◽  
Vol 15 (2) ◽  
pp. 198-219
Author(s):  
Oziengbe Scott AIGHEYISI
Keyword(s):  
Economic Growth ◽  
Least Squares ◽  
Threshold Model ◽  
Threshold Level ◽  
Ordinary Least Squares ◽  
Growth Effect ◽  
Series Data ◽  
Threshold Effects ◽  
Long Run ◽  
The Relationship

This study uses annual time series data spanning 1981–2018 to investigate the threshold effects of import dependence on economic growth in Nigeria. The ordinary least squares (OLS) and the fully modified OLS (FMOLS) techniques are employed for estimation of a quadratic regression model to determine the nature of the relationship between aggregate import dependence and economic growth. It is found that the relationship is concave, that is, it follows an inverted-U shape. The conditional least squares estimator is thereafter employed to estimate the threshold model specified to determine the threshold level of import dependence. The study finds a threshold level of 26% for aggregate import dependence. Below this threshold, import dependence positively affects economic growth; above the threshold, the growth effect of import dependence is adverse. Furthermore, it is found that the long-run growth effect of Inflation is adverse, and investment is favourable to long-run economic growth. Based on these findings, the paper recommends efforts by Nigeria’s government to reduce import dependence below the estimated threshold of 26%, control inflation and encourage investment so as to enhance the growth of the nation’s economy.

scholarly journals Stock Market Development and Economic Growth: Empirical Evidence From an Institutional Impaired Economy

2020 ◽  
Vol 11 (5) ◽  
pp. 496
Author(s):  
Maku Affor Owen
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Sustainable Growth ◽  
Market Development ◽  
Stock Market Development ◽  
Test Methodology ◽  
Long Run ◽  
Stock Market Performance ◽  
Bound Test ◽  
The Relationship

The research investigated the relationship linking stock market development and economic growth from 1985 to 2018. In measuring growth, Gross domestic product (GDP) was adopted, while stock market was surrogated by turnover ratio, market-capitalization, and value of share- traded, sourced from the Central Bank of Nigeria (CBN) and the Security and Exchange Commission Database. The inclusion of money supply (M3) captured innovation (financial) in the monetary sector. In investigating the aforementioned relationship, the ARDL Bound test methodology was adopted. Empirical results from the investigation confirm the existence of a long-run relationship between stock market development and growth. Similarly, there was a positive relationship between indices of stock market development and growth, albeit statistically insignificant. The study concluded that financial institutions should concentrate on financial innovation in other dimensions in other to boost stock market performance that will result in sustainable growth.

scholarly journals The nexus between stock market development and economic growth

2016 ◽  
Vol 14 (1) ◽  
pp. 269-277
Author(s):  
Kunofiwa Tsaurai
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Gdp Per Capita ◽  
Market Development ◽  
Stock Market Development ◽  
Real Gdp ◽  
Real Gdp Per Capita ◽  
Short Run ◽  
Per Capita ◽  
The Relationship

The study investigated the relationship between stock market development and economic growth in Belgium using ARDL approach with annual time series data from 1988 to 2012. Real GDP per capita was used as a proxy for economic growth and stock market capitalization as a ratio of GDP as an approximate measure of stock market development. The relationship between stock market development and economic growth falls into four categories which are (1) stock market-led economic growth, (2) economic growth-led stock market development, (3) feedback effect and (4) neutrality hypothesis where the relationship between the two variables does not exist. Despite the existence of these four views on the relationship between stock market and economic growth, it appears from the literature review done by the author that majority of the empirical evidence support the stock market-led economic growth view. The fact that the topic on the directional causality between stock market and economic growth is still inconclusive is the major motivating factor why the author chose to investigate the relationship between the two variables in Belgium. The study observed that there exist an insignificant long run causality running from stock market development towards economic growth in Belgium. This relationship was not detected in the short run. Moreover, the reverse causality from real GDP per capita to stock market capitalization both in the long and short run was not detected in Belgium. These results are at variance with the majority of the empirical findings reviewed earlier on. It could possibly be that certain conditions that are necessary to enable stock market to significantly positively influence economic growth were not in place in Belgium. Therefore, the study urges the Belgium authorities to put in place the right environment, policies and programmes that enable the stock market to play its role of stimulating economic growth.

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