Evidence from selected subsaharan africa ssa countries from 1984 to 2015. 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. In general, the literature indicates that longrun growth is positively associated with. Theory also provides conflicting predictions about. Stock market development and economic growth in sri lanka.
The link between openness and longrun economic growth. The surprising result was contrary to expectations the correlation between stock returns and economic growth across. Stock markets banks, analysis of a panel data set for and growth 197698 shows that on balance stock markets and. Dec 10, 20 the aim of this paper is to investigate the long run relationship between the development of banks and stock markets and economic growth. Crosscountry growth regressions suggest that the predetermined. Financial innovation, stock market development, and. Two measures of stock market development namely size and liquidity are used. Stock market performance, economic growth, causality test, short run and long run dynamics 1. Empirically, chapter two of the study used generalised method. Pdf stock market development and longrun economic growth. Sep 23, 2008 the study empirically assessed the relationship between stock market development and long run economic growth in nigeria for the period 1980 to 2000.
Stock markets banks, analysis of a panel data set for and growth. Stock market development and economic growth springerlink. This article examines whether there is a strong empirical association between stock market development and longrun economic growth. Stock markets, financial development and economic growth. Financial innovation, stock market development, and economic. G00, g10, o40, o41 1 introduction finance a ects the real economy in several ways, hence. Stock markets, corporate finance, and economic growth. No 1582, policy research working paper series from the world bank abstract. Zhao examines the relationship between stock returns and economic growth in china.
Stock prices and gdp in the long run annika alexius. Stock market development and longrun growth english the. Macroeconomic indicators and their impact on stock market. In both short and long run, there was a positive but insignificant relationship between stock market development and economic growth in nigeria and south africa. Moreover, instrumental variables procedures indicate. A time series econometric investigation is conducted over the period 1995 2006. We make use of a johansenbased panel cointegration methodology allowing for crosscountry dependence to test the number of cointegrating vectors among these three variables for 5 developing countries.
The authors empirically evaluate the relationship between stock market development and longterm growth. Stock market development and longrun growth english abstract. Long run growth is defined as the sustained rise in the quantity of goods and services that an economy produces. Crosscountry growth regressions suggest that the predetermined component of stock market development is positively and robustly associated with longrun economic growth. An assessment of nigerian stock exchange market development. While crosscountry regressions imply a strong link between stock. Economic growth is the increase in the market value of the goods and services that an. This study examined the effect of foreign direct investments fdi on stock market development smd and longrun growth.
Stock market development and longrun growth by sara zervos. Pdf foreign direct investment, stock market development. Stock market development and longrun growth oxford. The results are inconsistent with theories that predict no correlation or a negative association between stock market. The rest of this section presents and discusses an array of stock market devel.
In general equilibrium, output, consumption, labour in. Stock market development and longrun growth by sara. Demirgiickunt and maksimovic 1996 and levine and zervos 1996 use these indexes to examine the empirical relationship among stock market development, firms financing decisions, and long run economic growth. G00, g10, o40, o41 1 introduction finance a ects the real economy in several ways, hence understanding the mechanisms through which it impacts on economic growth is essential in order to derive policy recommendations levine, 2005. An empirical analysis of stock market performance and. Stock market development and economic growth in india. Stock market development and longrun growth ebook, 1996.
While crosscountry regressions imply a strong link between stock market development and economic growth, the results should be viewed as suggestive partial correlations. The aim of this paper is to investigate the long run relationship between the development of banks and stock markets and economic growth. The second group of studies did not find a significant relationship between stock market development. Crosscountry growth regressions suffer from measurement, statistical, and conceptual problems. This paper examines the impact of stock market development on growth in west african monetary union. Stock market development has been the subject of intensive theoretical and empirical studies. The link between openness and longrun economic growth web version. This study examined the effect of foreign direct investments fdi on stock market development smd and long run growth. More recently, the emphasis has increasingly shifted to stock market indicators and the effect of stock markets on economic development. While crosscountry regressions imply a strong link. Stock market volatility and economic growth in nigeria.
The authors also reported that stock market development grangercauses economic growth. Introduction the relationship between financial sector development and real economic activity has been a debatable issue in theoretical and empirical research. Yet, there exists very little hard empirical evidence on the importance of stock markets development to longrun economic growth and almost none exists. In general, this study examines the stock market, financial development and economic growth in selected subsahara african countries. On the other hand, stock market development has a significant effect on economic growth on short run.
Is the financial system important for economic growth. Can stock market development boost economic growth. No 1582, policy research working paper series from the world bank. Financial development and growth in the short and long run. More recently, the emphasis has increasingly shifted to stock market indicators and. Stock market development and longrun growth the world bank. First, a higher rate of return on stock market will encourage investment as more. Stock market development and longrun growth english. Finance, financial sector policies, and longrun growth. This article examines whether there is a strong empirical association between stock market development and long run economic growth. Questions were raised whether stock market development causes economic growth taking into account the negative effect of interest rate on stock market development. The granger causality analysis deduced that economic growth of south africa is significantly affected by market capitalization but not so in nigeria.
The authors empirically evaluate the relationship between stock market development and long term growth. Stock market development and long run growth english abstract. Using the cointegration and causality tests for the period june 1991 to june 20, the study confirms a well defined long run equilibrium relationship between the stock market development indicators and. It is measured as the percentage rate change in the real gross domestic product gdp. On the other hand, stock market development has a significant effect on economic growth on shortrun.
Moreover, instrumental variables procedures indicate a strong connection between the predetermined component in the long run. The data suggest that stock market development is positively associated with economic growth. However, it can be argued that the liquidity created by stock market may also have negative impact on the long run economic growth in the real economy. Stock market development was found to be an important factor that. The data suggest that stock market development is positively associated with economic. The volatility measures of stock market returns in nigeria from 1980 to the first quarter of 2010 is presented in figure 1. Moreover, instrumental variables procedures indicate a strong connection between the predetermined component of stock market development and economic growth in the long run.
Procedia economics and finance 3 2012 438 a 444 22126716 2012 the authors. Empirically, chapter two of the study used generalised method of moment gmm dynamic instrumental variable approach to investigate financial development and economic growth nexus in the east african countries. First, it constructs more measures or criteria of stock market. The study by muhammad et al 2008 suggested that there is a long run relationship between stock market development and economic growth. Stock markets, financial development and economic growth in. Stock market development and longrun growth in nigeria. Economic growth is the increase in the market value of the goods and services that an economy produces over time. Pdf foreign direct investment, stock market development and.
Financial development and growth in the short and long run raymond fisman, inessa love. Stock market development and longrun growth econpapers. Theory provides ambiguous predictions concerning the question of whether financial development exerts a positive, causative impact on longrun economic growth. Stock market development and financial intermediaries. We analyze both the short run and long run relationship by constructing an ecm. Financial development, economic growth, transitional dynamics jel classi cation. In general, the literature indicates that long run growth is positively associated with the development of stock markets e.
Stock market development and longrun economic growth conclusao quadro te orico m etodo tamanho, liquidez e integra. The second group of studies did not find a significant relationship between stock market development and economic growth e. The results are inconsistent with theories that predict no correlation or a negative association between stock market development and economic performance. Stock markets banks, analysis of a panel data set for and. Demirguckunt and levine 1996 identified three possible channels through which this effect may propagate. Crosscountry growth regressions suggest that the predetermined component of stock market development is positively and robustly associated with long run economic growth. First, it constructs more measures or criteria of stock market development than any previous study.
The study by muhammad et al 2008 suggested that there is a longrun relationship between stock market. While crosscountry regressions imply a strong link between stock market development and economic growth, the results should. This paper examines the long run and causal relationship between stock market development and economic growth. Longrun growth is defined as the sustained rise in the quantity of goods and services that an economy produces. Pdf stock market development and longrun growth semantic. Liu and hsu 2006 reported a positive impact on economic growth of stock market development in taiwan, korea and japan.
Stock market volatility and economic growth in nigeria 1980. Pdf stock market development and economic growth an. Dec, 2017 in both short and long run, there was a positive but insignificant relationship between stock market development and economic growth in nigeria and south africa. Is there a link between gdp growth and equity returns.
The study empirically assessed the relationship between stock market development and longrun economic growth in nigeria for the period 1980 to 2000. This paper examines the impact of stock market development on growth in mauritius. The research presented here focuses on four issues. Stock market development and longrun growth the world. This study attempts to investigate the direction of causality between stock market development and economic growth in the indian context. Demirgiickunt and maksimovic 1996 and levine and zervos 1996 use these indexes to examine the empirical relationship among stock market. The study used secondary data while four models of multiple regressions were specified. They omit measures of stock market development because measures of stock market development for a twentyyear period are only available for about 40 countries.
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