Stock Market Development and Economic Growth: An Evidence from Six South and Southeast Asian Countries

S.J.M.N.G. Samarakoon
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S.J.M.N.G. Samarakoon: Department of Economics and Statistics, Faculty of Social Sciences and Languages, Sabaragamuwa University of Sri Lanka, Sri Lanka

International Journal of Research and Innovation in Social Science, 2023, vol. 7, issue 3, 582-599

Abstract: The study appraised the relationship between stock market development and economic growth in six Asian countries. The study employed collected secondary data from World Bank Indicators of 15 years have been used for the period from 2006 to 2020. The relationship has been measured in terms of market capitalization, total value of stocks traded, stock turnover ratio and volume of the stock market determined through the total number of companies listed in the stock exchange of each country in countries South and Southeast Asian region. By using linear-log model, the study has found out that development of the stock market affects economic growth significantly. The development of the stock market has significant and positive effect on the economic growth of Bangladesh, India, Sri Lanka, Indonesia, Malaysia, and Thailand. Further, in response to the second objective of the research study, the best indicator of the capital market is the Volume of the Stock Market (Listed Domestic Companies), which is highly associated with the real economic growth of Bangladesh, India, Sri Lanka, Indonesia, Malaysia, and Thailand. In addition, the result of the study by employing the stepwise regression analysis shows that the most representative indicator of capital market that is positively associated to the real economic growth of each country is volume of the stock market (Listed Domestic Companies).

Date: 2023
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