scholarly journals Stock Market Development and Economic Growth: A Comparative Evidence from two Emerging Economies in Africa – Nigeria and South Africa

2017 ◽  
Vol 11 (1) ◽  
pp. 1-15 ◽  
Author(s):  
Charity Osakwe ◽  
Amalachukwu Ananwude
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Stock Market ◽  
Emerging Economies ◽  
Market Development ◽  
Stock Market Development

On the linkage between stock market development and economic growth in emerging market economies

2015 ◽  
Vol 14 (4) ◽  
pp. 363-381 ◽  
Author(s):  
Pramod Kumar Naik ◽  
Puja Padhi
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Emerging Economies ◽  
Emerging Market ◽  
Market Development ◽  
Data Series ◽  
Annual Data ◽  
Content Type ◽  
Stock Market Development ◽  
The Impact

Purpose – The purpose of this study is to empirically examine the impact of stock market development on the economic growth for a panel of 27 emerging economies using annual data over the period from 1995 to 2012. Design/methodology/approach – A second-generation panel unit root test developed by Pesaran (2007) has been used to test the stationary properties of the data series. To achieve the study objectives and to mitigate the endogeneity problem that exists in the given model, the authors use a dynamic panel “system GMM” estimator. The authors also use a heterogeneous panel causality test proposed by Dumitrescu and Hurlin (2012) to examine the direction of causality among the variables. Findings – The empirical findings indicate that stock market development significantly contributes to economic growth. Further, a unidirectional causality running from stock market development to economic growth has been found. This finding is consistent with the supply-leading hypothesis. Besides stock market development, it is also evident that macroeconomic variables, such as investment ratio, trade openness and exchange rates, have significant impact on economic growth. Research limitations/implications – The findings suggest that a well-functioning stock market, a more globalized economy and increasing aggregate investment can potentially foster the economic growth in those emerging economies. Originality/value – Unlike other studies, this study constructs three alternate composite indices along with the individual indicators of stock market development and applies robust panel econometric techniques to establish more reliable results.

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 Financial Intermediaries Versus Financial Markets: A South African Experience

2011 ◽  
Vol 10 (2) ◽  
Author(s):  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Stock Market ◽  
Causal Relationship ◽  
Financial Development ◽  
Financial Sector ◽  
Market Development ◽  
Stock Market Development ◽  
African Experience ◽  
Causality Model

In this paper, a dynamic causal relationship between stock market development, bank-based financial development and economic growth in South Africa is examined during the period 1980:1-2007:3, using a trivariate Granger causality model. The study attempts to answer two critical questions. Does financial sector development Granger cause economic growth? Which sector leads in the process of financial development in South Africa – bank-based sector or stock market sector? Using a cointegration-based error-correction mechanism, the empirical results reveal that there is a distinct unidirectional causal flow from stock market development to bank development. The results also indicate that there is a bi-directional causal relationship between stock market development and economic growth.  Similar results were also found on the causality between bank-based financial development and economic growth. The study, therefore, concludes that whilst both financial development and economic growth Granger cause each other, the development of the financial sector in South Africa is largely driven by the stock market activities.

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.

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