scholarly journals Correlates of Stock Market Development and Economic Growth: A Confirmatory Study from Ghana

2022 ◽  
Vol 14 (3) ◽  
pp. 1
Author(s):  
Edward Alabie Borteye ◽  
Williams Kwasi Peprah
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Positive Relationship ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Positive Association ◽  
Market Liquidity ◽  
Market Development ◽  
Stock Market Development ◽  
The Relationship

The study confirms the debate on whether stock market development correlates to economic growth. The dimensions used for the stock market development consisted of market liquidity, size, and capitalization. Economic growth was represented by the real gross domestic product (GDP) growth rate. Based on secondary data obtained from the Ghana Stock Exchange (GSE) and Ghana Statistical Service from 2014 to 2018, a correlational research design was adopted to analyze the data with SPSS 20v by using bivariate and regression. The study found that there is a high positive relationship between market liquidity and economic growth, a moderate negative relationship between market size and economic growth, and a moderate positive relationship between market capitalization and economic growth. Also, the stock market development of market liquidity, size, and capitalization predict 95.7 percent of economic growth. The study summarized that there is a high positive association between stock market development and economic growth as a confirmatory revelation, but all the relationship results were not statistically significant. The result points to the casualty of the relationship between stock market development and economic growth. The study recommends that more firms must be encouraged to be listed on GSE to enhance economic growth in Ghana.

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 Stock Market Development and Economic Growth: An Empirical Analysis of Zimbabwe (1989-2014)

2016 ◽  
Vol 7 (3) ◽  
pp. 20-36 ◽  
Author(s):  
Rabson Magweva ◽  
Tafirei Mashamba
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Stock Exchange ◽  
Market Development ◽  
Stock Market Development ◽  
Long Run ◽  
Short Run ◽  
To Come ◽  
Medium Enterprises ◽  
The Relationship

The relationship between stock market development and economic growth varies across nations and regions. This relationship is of significance to regulatory authorities, investors and portfolio managers in their operations aimed at enhancing the welfare of the citizens and clients at large. The purpose of this study is to examine the relationship between these two variables in Zimbabwe for the period 1989 to 2014. The paper employed the Vector Error Correction Model approach after establishing the order of integration (unit root tests) and cointegration between variables. All the variables were found to be stationary at 1% level after first differencing using the Phillips-Peron tests. The long run relationship was negative, whereas the short run coefficients were insignificant. Though contrary to financial theory, the results, to a large extent, testify to what happened during the period. Based on these findings, the Zimbabwe Stock Exchange and Securities and Exchanges Commission are urged to come up with alternative products to lure new listings from the small to medium enterprises. It is also recommended that all the stakeholders focus beyond the Zimbabwe Stock Exchange to promote economic growth as the firms seem to raise funds from other sources.

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 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 IMPACT OF STOCK MARKET DEVELOPMENT ON ECONOMIC GROWTH: EMPIRICAL EVIDENCE

Globus ◽  
2020 ◽  
Author(s):  
T.M. Aliyev
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Stock Market ◽  
Direct Investment ◽  
Granger Causality Test ◽  
Market Liquidity ◽  
Market Development ◽  
Causality Test ◽  
Stock Market Development ◽  
Oil Sector

Development of non-oil sector of Azerbaijan was always one of the main priorities of the government. Oil sector of the economy was well developed since Azerbaijan got its independence, but in order to use the oil source more effectively it was determined to diversify the funds into non-oil sector of the economy, which in the end gave huge boost to most industries of the economy and led to increase of foreign direct investment. However, another source of the foreign direct investment and investor attraction – stock markets, were not developed and organized properly up until 1998, which was mainly due to outdated procedures left from USSR, absence of principles, methodology and understanding of how stock market can play huge role in expansion of economy and attraction of foreign investment. Nowadays, Azerbaijan has all possibilities to widen the stock market, enable easy way of increasing number of small businesses, startups and open the doors for them to global economy and lead to speedy expansion of the businesses. This research analyses the possible relationship between stock market development and economic growth, in order to predict possibility of positive impact of stock market on economic growth, overall social economic welfare of the country and business environment. For the purposes of the research, statistical figures of the country`s main economic indexes were collected: gross domestic product value, foreign direct investment value, stock market liquidity and turnover values, which were then analyzed and tested on various levels of cointegration test, Granger Causality test, vector error correction model and etc. All the analysis were done on statistical software Stata 11 based on figures of 1998-2016. The outcome of the Johansen-Julius shows existence of cointegration and by that VECM test proves relationship between stock market and economic growth in long run, while Wald Test confirms correction of this growth in short term by given explanatory variables. Hence, Granger causality test is conducted further, which determines bidirectional relationship between 3 variables: foreign direct investment, GDP and LIQ (stock market liquidity level). Based on the outcome of the analysis, study concludes that expansion of stock market and increase in foreign direct investment will have chain effect which leads to economic growth and social welfare in Azerbaijan.

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 Determinants of stock market development: The case of developing countries and Vietnam

2017 ◽  
Vol 24 (01) ◽  
pp. 32-53
Author(s):  
Thanh Su Dinh ◽  
Hoai Bui Thi Mai ◽  
Bon Nguyen Van
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Stock Market ◽  
Money Supply ◽  
Rule Of Law ◽  
Market Liquidity ◽  
Market Development ◽  
Stock Market Development ◽  
Government Effectiveness ◽  
Domestic Credit

Stock market is a key channel to the mobilization of long-term capi-tal in an economy, and determinants of stock market development in developing countries are still undecided. This paper aims to inves-tigate these determinants in Vietnam and other developing countries, whose differences are also pointed out by applying two-way Gener-alized Method of Moments to the panel data of 36 developing countries over the period of 2003–2014. Our findings are intriguing. First, in developing countries economic growth, domestic credit, and stock market liquidity are positive determinants of the development of stock market. While the effect of money supply is negative, insti-tutional factors such as government effectiveness and rule of law have significantly positive impacts, in contrast to corruption control and political stability (whose impacts are significant and negative). Second, regarding the development of the stock market in Vietnam, the effects of such macroeconomic factors as economic growth, domestic investment, foreign direct investment, domestic credit, broad money supply, stock market liquidity, and inflation are signif-icant and negative, whereas those of all institution variables, includ-ing control of corruption, government effectiveness, political stabil-ity, regulatory quality, rule of law, and voice and accountability, are significant and positive. This implies that well-established institutions are crucial for promoting a demand for stocks and stock market performance in Vietnam.

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.

scholarly journals Stock Market Development And Economic Growth: The Case Of Mauritius

2011 ◽  
Vol 8 (2) ◽  
Author(s):  
Baboo M Nowbutsing ◽  
M. P. Odit
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Stock Exchange ◽  
Market Development ◽  
Financial Health ◽  
Stock Market Development ◽  
Long Run ◽  
Short Run ◽  
Two Measures ◽  
The Impact

Stock market is an indicator of an economy financial health. It indicates the mood of investors in a country. As such, stock market development is an important ingredient for growth. The stock exchange of Mauritius is fairly new compared to many countries. This paper examines the impact of stock market development on growth in Mauritius. A time series econometric investigation is conducted over the period 1989 -20067. We analyse both the short run and long run relationship by constructing an ECM. Two measures of stock market development namely size and liquidity are used. We define size as the share of market capitalization over GDP and liquidity as volume of share traded over GDP. We found that stock market development positively affect economic growth in Mauritius both in the short run and long run.

Sign in / Sign up

Export Citation Format

Share Document