Developing countries are in search of better policies to achieve higher economic growth since growth reduces poverty. Development of financial sector is one of the major economic policies since financial development influences economic growth and reduces poverty. Economic literature over the years has established that a sophisticated stock market is a critical factor for long-run economic growth.Given the importance of stock market for developing countries, this study empirically examines the relationship between stock market development and economic growth using the time-series for India over the period 1980-2008. Second, the study also statistically detects the direction of causality (cause and effect relationship) in a multivariate setting between stock market development and economic growth, which is vital for policy implication. This study provides important channels of stock market-growth linkages which is important for developing countries like India.
This book is concerned with the role of stock market development on economic growth within the Nigerian context. The author examines the long run causal relationship between the stock market development and economic growth. Essentially the study uses the endogenous growth theory as a basis of its theoretical foundation. The study uses one banking sector variable and three measures of stock market development over the period of 1980 - 2007 The author’s findings from the study suggest that stock market development has impacted on economic growth in Nigeria. The study also finds evidence of a bi-directional relationship between stock market development and economic growth. The findings of the study support the view that stock market development and economic growth in Nigeria are complementary. The contribution of this study lies in the fact that it provides additional evidence on the ongoing debate of the impact stock markets have on the economic growth process within a specific country. This work will be of interest to people interested in stock markets, financial and economic development, time series analysis as well as African studies.
The controversy on the impact of stock market performance and economic growth and development is empirically evaluated in this study, using Nigerian data. This effort is spurred by the raging debate on the relevance of stock market in promoting economic growth. Using the Ordinary Least Square regression method, the empirical evidence suggest that stock market size and turnover ratio promote economic growth, while stock market liquidity hurts economic growth. Although our result suggests that stock mark performance indices promote economic growth and development, this evidence should be viewed with some caution. The measure of stock market performance used in this study may not be adequate. Although the market capitalization ratio (market capitalization/GDP), value of transactions traded ratio (value of transaction traded/GDP), and turnover ratio (value of transaction traded/market capitalization) as proxies of stock market performance has been popular in literature, it clearly does not include other indicators of stock market development like international integration, market concentration, regulatory and institutional indicators and stock market volatility.
The finance literature suggests that stock markets serve important functions even in those economies in which a well-developed banking sector already exists.Stock markets also provide entrepreneurs with liquidity and for opportunities to diversify their portfolios. The primary purpose or objective is to study the interrelationship between stock market development and economic growth of India in both pre and post-liberalized periods between 1971 and 2002.For want of consistency of the data used and for statistical analysis, annual data are used for pre liberalization period. In order to have a reasonable number of observations for statistical significance, quarterly data are used for twelve years in the post liberalization period.Empirical testing is done by various classifications namely: stock market development, comparison of stock market development and economic growth variables and interrelationship between stock market development and economic growth during pre and post liberalization separately.Descriptive statistics, bi-variate correlations, exponential growth, elasticity and conglomerate indexes step wise regressions are the tools used in the study.
One of the most enduring debates in economics is whether financial development causes economic growth or whether it is a consequence of increased economic activity. The relationship between stock market development and economic growth has received a great deal of attention during the last decades. Many economists have underlined the importance of stock market development in the process of economic growth while others think that this importance is over-stressed. Managers and owners of businesses are often ignorant of the full range of sources of finance available to them as well as the best means of accessing these funds. As businesses expand, it is pertinent to the continuing success of such a business that it possesses the ability to identify its financing requirements and its sources. Of all the sources of funds, the stock market is by far the largest source of finance for any organization and the study is needed to extensively focus on the opportunities that bound in the Nigeria stock market with regards to the process of the capital formation. This study examine the stock market development with relationship between economic growths in Nigeria.
Revision with unchanged content. China began its current economic reform in the late 1970s. Since initiating its reforms, China has restructured its banking sector while launched equity market in early 1990s. China has been experiencing a rapid growth at an average rate over 8 percent per annum during the last two decades. Does the development of financial intermediaries contribute to the economic growth in China? This study examines how financial intermediaries in China influence the real sector growth. A particular focus is mainly set up on the direction of causality between banking sector and/or stock market and economic growth. The analysis should help to answer the questions: - Does each economic region in China adopt the same growth pattern? - Does the development of banking sector lead to the real sector growth? - Is the development of banking sector a product of economic growth? - Does the same direction of financial-growth causality apply to the entire country? - Does the development of stock market lead to the economic growth? What kind of role has the stock market been performing in China’s economic growth? The book is addressed to economic analysts and researchers who are interested in studying the financial-growth nexus in the context of China in a statistical manner.
The relationship between emerging stock market and economic growth is conceived as more than a puzzle. The Impact of Stock market on Economic Growth provides in-depth analysis to approach such complex topic by using firm level data on various financial and economic variables. Written in an approachable and easy style, the evidence provided in this book raises questions on the validity of flow of financial service from emerging market.
Contemporary economies of developing countries are changing due to rapid changes in the world economy. The economies of emerging market countries are witnessing changes in the composition of capital flows because world stock markets are expanding rapidly. Foreign direct investment and stock market boom are the indicators of the changing world economic order. Hence, Stock market has been associated with economic growth through its role as source for new private capital. On the other hand, stock market development is the catalyst for economic growth. The purpose of this study examines the relationship between stock market development and economic Growth. Empirically, based on the data for Emerging market and developed market countries during the 10 years’ period, from 1999 – 2008 using the generalized method of moments (GMM) for dynamic panel method approach. To control for the country specific effect, the model is further estimated for the developed and emerging member countries.
At the end of the 20th century and in the beginning of the 21st century there is an enormous change in global economy. Stock Market of Bangladesh plays an important role in the economic development of the country. In this book we have tried to find out the relationship with stock market and financial intermediaries, the roles of financial intermediaries for developing the market of stock, and future growth of stock market as well as overall economic development of the country. Although Bangladesh stock market is growing over time, the growth has not yet assumed any stable and obvious trend. Bangladesh stock market is still at an early stage of its growth path with a small market size relative to gross domestic product and is characterized by poor liquidity and high market concentration. We also show that the financial intermediaries can play a greater role for the betterment of the stock market in present volatile situation and of course in future.
The intent of this study is to look into the role stock market development plays on economic growth in Africa. It uses annual data from a panel of 36 countries of which 18 have stock markets in Africa over the period 1990-2010. Panel data econometrics technique is used in data analysis. Our literature survey reveal the key factors that explain economic growth are as follows: initial level of development proxied by real income per capita, gross investment to GDP ratio, macroeconomic instability proxied by inflation rate, human capital formation proxied by school enrolment rate, government consumption to GDP; and level of openness proxied by the sum of exports and imports to GDP. Our main findings are: Stock market development had a positive effect on economic growth, thus facilitating faster growth on countries with stock markets, Investment, human capital formation and openness positively influenced economic growth, inflation and government consumption show a negative impact, poor countries tended to grow faster compared to richer countries, banking sector development variables had a positive impact and countries that are politically stable and less corrupt tend to grow faster.
This work sets out to examine the relationship between the Nigerian Capital Market and economic development of Nigeria from 1987 to 2006. Thus, the performance of the Nigerian Capital Market indicators as they affect the GDP growth rate and human development index in Nigeria was examined. Multiple linear regression model was adopted as the method of analysis. The evaluation technique includes t-statistics, R squared, adjusted R squared, Durbin Watson test, standard error test and the f-statistics. The specific findings of this study show that there is no significant relationship between the capital market indicators and economic development in Nigeria during the period 1987 to 2006. There is a positive but insignificant relationship among the Nigerian Stock Exchange market capitalization, turnover ratio and economic development, while the relationship between the Nigerian Stock Exchange number of listed securities and economic development is negative and insignificant. Therefore, the Nigerian capital Market has fallen short of expectation vis-a-vis its role in fostering investment for economic growth and development.
This book analyse the aspects of Economic Growth and Human Development across Indian States during post and pre reform period. This book looks extensively inequality patterns in India across the states and also within the states. A very useful analysis of convergence and determinants of economic growth and human development has also been done. This book is quite useful for the students working in the field of economic growth and human development and especially for those who are interested in Inequality.
This research examines the relationship between financial development and economic growth in 15 developed European countries before and after the formation of the euro. The results of the panel data analysis show that financial development is significant in promoting economic growth for both periods. The impact of the banking sector development on growth, however, is greater in the post-euro period, whereas the impact of stock market development on growth is reducing in the period investigated. The study concludes that the formation of European Monetary Union does not weaken the relationship between financial development and economic growth in developed European countries.
An equity market is a public entity for the trading of company stock and derivatives at an agreed price. Bangladesh capital market is one of the smallest market in Asia but the third largest in the South Asian region. Equity market plays an important role in economic development of a country. Economic development is a term that generally refers to the sustained, concerted effort of policymakers and community to promote the standard of living and economic health in a specific region. The equity market believes that a dynamic, automated, transparent stock exchange is needed in Bangladesh. Emerging equity market should be very attractive for risk capital investors. In this book we consider the equity market and recommended to create an emerging equity market in Bangladesh.
Although stock market liberalization is often blamed as causing crises it is concluded that the effects of liberalization on stock market growth is positive. However, there is no professional consensus on the net benefits of financial liberalization. Various measures of stock market development and various statistical analyses indicate that Nepalese stock market is in developing stage. Low market capitalization and lower number of listed companies shows the smaller size of stock market while higher deviation on NEPSE index shows more risk in investment. Apart from this, regression analysis state that only market capitalization has significant impact on growth of domestic product (GDP). The theoretical model mainly predicts that there is a vital role of stock market for overall economic development in both developing as well as developed countries. Stock market works as a vehicle for raising capital for firms. It helps investors to diversify their wealth across variety of assets and the companies enjoy permanent access to capital and rose through equity issue. The growth in the economy only occurs if society invests sufficient amount of capital in firms.