Endogenous growth and Stock Market Development

Guglielmo Maria Caporale, Peter Howells () and Alaa Soliman ()

No 302, Working Papers from Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol

Abstract: This paper re-examines the relationship between stock market development and economic growth. It provides a theoretical basis for establishing the channel through which stock markets affect economic growth in the long run. It examines the hypothesis of endogenous growth models that financial development causes higher growth through its influence on the level of investment and its productivity. The empirical part of this study exploits techniques recently developed to test for causality in VARs. The evidence obtained from a sample of four countries suggests that investment productivity is the channel through which stock market development enhances the growth rate in the long run.

Keywords: Financial Development; Endogenous Growth; Stock Market; Channel of Transmission; Causality Testing in VARs (search for similar items in EconPapers)
JEL-codes: C12 C32 O16 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2003-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:uwe:wpaper:0302

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