scholarly journals The Causality between Stock Market Development and Economic Growth: Econometric Evidence from Bangladesh

2018 ◽  
Vol 10 (5) ◽  
pp. 212
Author(s):  
Abdullahil Mamun ◽  
Mohammad Hasmat Ali ◽  
Nazamul Hoque ◽  
Md Masrurul Mowla ◽  
Shahanara Basher
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Real Effective Exchange Rate ◽  
Market Development ◽  
Stock Market Development ◽  
Interest Rate Spread ◽  
Long Run ◽  
Financial Depth ◽  
Effective Exchange ◽  
Effective Exchange Rate

The growth performance of Bangladesh over the last one and a half decades along with the stock market development sparks the question of whether stock market development has a significant impact on economic growth of the economy. The study investigates the time series evidence of the influence of stock market development on growth of Bangladesh economy for the period 1993-2016 employing ARDL Bounds testing approach and finds stock market development has direct impact on economic growth both in the short-run as well as in the long run together with financial depth, interest rate spread and real effective exchange rate. Granger causality tests confirm a bidirectional causal relationship between stock market development and economic growth. However, the study fails to identify a system convergent to equilibrium in regard to stock market development along with other factors that has important economic implications. Persistent improvement in financial depth and fall in interest rate spread throughout the sample period with consistent performance of real effective exchange rate except some spikes in recent years raise the demand for playing the needed role by all concerned for confirming the stability of stock market and its development in order to validate the steady state of equilibrium in the long-run.

scholarly journals DOES STOCK MARKET DEVELOPMENT AFFECT ECONOMIC GROWTH? ECONOMETRIC EVIDENCE FROM BANGLADESH

2018 ◽  
Vol 17 (1) ◽  
pp. 123 ◽  
Author(s):  
Abdullahil Mamun ◽  
Shahanara Basher ◽  
Nazamul Hoque ◽  
Dr. Md Hasmat Ali
Keyword(s):  
Stock Market ◽  
Positive Impact ◽  
Output Growth ◽  
Real Effective Exchange Rate ◽  
Market Development ◽  
Series Data ◽  
Large Contribution ◽  
Stock Market Development ◽  
Long Run ◽  
Financial Depth

The study aims to evaluate the causality linkage between  stock market development (SMD) and growth of the economy  in Bangladesh. Using time series data of quarterly frequency through 2000Q1-2017Q4 and employing the Johansen cointegration approach the study reveals that there  are  long-run co-integrating relationships among the variables, namely, GDP, development of the stock market, net interest spread, real effective exchange rate and financial depth. The Vector Error Correction Model (VECM) confirms the presence of a long-term equilibrium relationship between GDP and other variables such as regressors as the system is found to be stable in the long-run. As revealed from the study, the short run positive impact of SMD on the growth of the Bangladesh economy sustains in the long run, which is also true for financial depth. However, financial deepening has a relatively large contribution to the output growth of Bangladesh than SMD. Granger causality tests assert that the causal association is unidirectional that runs from SMD to output growth.

Stock Market Development And Economic Growth in Nigeria

1998 ◽  
Vol 2 (1) ◽  
pp. 33-38 ◽  
Author(s):  
John C. Anyanwu
Keyword(s):  
Economic Growth ◽  
Risk Management ◽  
Stock Market ◽  
Conceptual Framework ◽  
Corporate Control ◽  
Market Development ◽  
Political Environment ◽  
Stock Market Development ◽  
Long Run

Is the stock market development important for economic growth in Nigeria? One line of research argues that it is not; another line stresses the importance of stock market development in allocating capital, acquisition of information about firms, easing risk management, mobilization of savings, and exerting corporate control. Indeed, some theories provide a conceptual framework for the belief that larger, more efficient stock markets boost economic growth. This article examines whether there is a strong empirical association between Nigerian stock market development and long-run economic growth. Our empirical results suggest that the Nigerian stock market development is positively and strongly associated with long-term economic growth. This implies that Nigerian policymakers should make concerted efforts at removing obstacles to stock market development while creating and sustaining an enabling macroeconomic and political environment for the market’s development.

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 Dynamic Relationship between Tourism and Economy: Evidence from Nepal

2018 ◽  
Vol 5 ◽  
pp. 16-22 ◽  
Author(s):  
Dipendra Karki
Keyword(s):  
Economic Growth ◽  
Real Effective Exchange Rate ◽  
Dynamic Relationship ◽  
Long Run ◽  
International Tourist ◽  
Augmented Dickey Fuller ◽  
Effective Exchange ◽  
Short Run ◽  
Effective Exchange Rate ◽  
Adf Test

The objective of this paper is to analyse the role of tourism in the Nepalese economic growth. I use a trivariate model of real Gross Domestic Product (GDP), international tourist arrivals and real effective exchange rate to investigate the long-run and short-run relationship between tourism and economic growth. The Augmented Dickey-Fuller ( ADF) test is used to determine the order of integration of the series, and I employ the Engle- Granger cointegration procedure to test for the presence of long-run relationship. By using annual macroeconomic data for Nepal for the period of 1962-2011, results reveal that there is a cointegrating relationship between tourism and economic growth.

Some dynamic macroeconomic perspectives for India’s economic growth

2020 ◽  
Vol 12 (4) ◽  
pp. 641-658
Author(s):  
Matiur Rahman ◽  
Anisul Islam
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Crude Oil ◽  
Real Effective Exchange Rate ◽  
Crude Oil Price ◽  
Content Type ◽  
Long Run ◽  
Effective Exchange ◽  
Short Run ◽  
Effective Exchange Rate

Purpose The purpose of this paper is to study impacts of changes in crude oil price, money supply, fiscal deficit and effective exchange rate on India’s economic growth (expressing all variables in real term). Design/methodology/approach First, a simple macroeconomic model is formulated to this effect. Next, linear autoregressive distributed lag procedure and vector error-correction model are applied for growth empirics. Annual data are used from 1977 through 2015. Findings Rises in real crude oil price and monetized real fiscal deficits have negative short-run and long-run effects on real economic growth. Increase in real money supply and real effective exchange rate appreciation helps promote real economic growth in both short run and long run. In all cases, there is evidence of net interactive positive feedback effects among the variables in the short run. Real effective exchange rate appreciation dampens exports, but it is helpful to imports of capital goods and crude oil that contribute to economic growth. So, the net effect on the economy may be conjecturally positive. Originality/value To the best of the authors’ knowledge, this paper is unique because of the formulation of macro-economic model pertaining to the topic and its subsequent empirical verification. Moreover, this paper seems more comprehensive than some other studies, cited in the literature review.

scholarly journals Stock market development and economic growth in Tanzania: an ARDL and bound testing approach

2020 ◽  
Vol 5 (3) ◽  
pp. 187-206
Author(s):  
Saganga Mussa Kapaya
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Time Series Data ◽  
Market Development ◽  
Series Data ◽  
Content Type ◽  
Stock Market Development ◽  
Testing Procedures ◽  
Long Run ◽  
Short Run

Purpose The purpose of this paper is to contribute to empirical evidence by recognizing the importance of stock markets in the financial system and consequently its causality to economic growth and vice versa. Design/methodology/approach The study used the autoregressive distribute lag model (ARDL) with bound testing procedures, the sample covered quarterly time-series data from 2001q1 to 2019q2 in Tanzania. Findings The results suggest that stock market development have both negative and positive causality for both short-run dynamics and long-run relationship with economic growth. Economic growth is found to only cause and relate negatively to liquidity both in the short-run and in the long-run. The results show predominantly a unidirectional causality flow from stock market development to economic growth and finds partial causality flow from economic growth to stock market development, as represented by stock market turnover which proxied liquidity. Originality/value The use of quarterly data to reflect more realistically the dynamics of the variables because yearly data may sometimes cover-up specific dynamics that may be useful for prediction and policy planning. The study uses indices to capture general aspects within the stock market against economic growth as an intuitive way to aggregate the stock market development effects.

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

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 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 Stock Market Development And Economic Growth In Hong Kong: An Empirical Investigation

2012 ◽  
Vol 11 (7) ◽  
pp. 795 ◽  
Author(s):  
SY Ho ◽  
NM Odhiambo
Keyword(s):  
Economic Growth ◽  
Hong Kong ◽  
Stock Market ◽  
Time Series Data ◽  
Market Development ◽  
Series Data ◽  
Stock Market Development ◽  
Long Run ◽  
Short Run ◽  
Market Capitalisation

This paper examines the relationship between stock market development and economic growth using time-series data from Hong Kong. The study uses three proxies of stock market development, namely: stock market capitalisation, stock market traded value, and stock market turnover. Given the weaknesses associated with the traditional co-integration techniques, the current study uses the recently introduced ARDL-bounds testing approach to examine the nexus between stock market development and economic growth in a dynamic setting. The empirical results show that the direction of causality between stock market development and economic growth depends on the proxy used to measure the level of stock market development. When stock market capitalisation is used as a proxy for stock market development, a distinct unidirectional causal flow from stock market development to economic growth is found to prevail, without any feedback. However, when stock market turnover is used, a causal flow from economic growth to stock market development is found to prevail in the short run and in the long run, while a causal flow from stock market development to economic growth is only found in the short run. The causality between stock market traded value and economic growth, however, failed to yield any long-run causal relationship from either direction. Only a short-run causality flow from economic growth to stock market traded value could be detected in this case.

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