Empirical Evidence on the Relationship Between Stock Market Development and Economic Growth: A Cross-Country Exploration in Asia

J. Felix Raj () and Samrat Roy ()
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J. Felix Raj: St. Xavier’s College (Autonomous)
Samrat Roy: St. Xavier’s College (Autonomous)

Chapter 23 in Analytical Issues in Trade, Development and Finance, 2014, pp 395-403 from Springer

Abstract: Abstract This chapter examines the causal relationship between stock market development and economic growth for selected Asian economies covering the period from 1980 to 2010. The study has been done for China, India, Pakistan, Sri Lanka, Indonesia, Malaysia, the Philippines and Singapore. The empirical part of this study applies Granger causality technique to arrive at causal relationships between the variables in the study. The evidence obtained from a sample of eight countries suggests that a well-developed stock market can foster economic growth in the long run. It also provides support to theories according to which well-functioning stock markets can promote economic development by fuelling the engine of growth through faster capital accumulation, and by tuning it through better resource allocation.

Keywords: Financial development; Economic growth; Stock market; Causality (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isbchp:978-81-322-1650-6_23

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DOI: 10.1007/978-81-322-1650-6_23

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