Stock Market Development and Economic Growth: Evidences from Asia-4 Countries

Muhammad Azam, Muhammad Haseeb, Aznita Binti Samsi and Jimoh Olajide Raji
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Muhammad Haseeb: School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia, Kedah, Malaysia,
Aznita Binti Samsi: School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia, Kedah, Malaysia,
Jimoh Olajide Raji: School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia, Kedah, Malaysia.

International Journal of Economics and Financial Issues, 2016, vol. 6, issue 3, 1200-1208

Abstract: The main purpose of this study is to examine the role of stock markets in economic growth for four Asian countries namely Bangladesh, India, China and Singapore. Annual time series cross country data over the period 1991 to 2012 and autoregressive distributed lag bound testing approaches an analytical technique are used. Our results suggest that there is long-term cointegration among economic growth, foreign direct investment (FDI), stock market development and inflation. The long-term elasticity estimates of the stock market development in all countries show expected sign but statistically significant only in China and Singapore. Incoming FDI is found to have positive relation to economic growth in all countries except India and statistically insignificant for all countries except China. In the short-run, stock market also has positive relation to economic growth in all countries but significant only in India and China. The impact of FDI on growth is significant and positive only for Singapore. The results indicate that the inflation variable is statistically significant in Bangladesh and Singapore. The empirical findings of the study reveal that stock market development and FDI inflows play vital roles in the process of economic growth and development in these selected countries.

Keywords: Economic Growth; Stock Market; Autoregressive Distributed Lag Model; Asia-4 Countries (search for similar items in EconPapers)
JEL-codes: C22 O16 O40 O53 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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