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Stock Market Development And Economic Growth: Evidence From Zimbabwe

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  • Bernhard O. Ishioro

    (Delta State University, Abraka, Nigeria)

Abstract

The study explores the causal linkage between stock market development and economic growth in Zimbabwe for the period 1990:I to 2010:IV. Applying the Augmented Dickey Fuller(ADF) unit root tests and the long-run Grangernon-causality estimation technique proposed by Toda and Yamamoto (1995), we tested the nature and direction of the causality between economic growth proxy by the real GDP growth rate and stock market development proxy by real market capitalization, value traded ratio and stock market volatility; and found that in line with the supply leading hypothesis- a bi-directional causality exists between economic growth and stock market development. The study recommends that both economy planners and stock market managers should ensure that the market and economy should be stimulated to grow at an increasingly consistent rate.

Suggested Citation

  • Bernhard O. Ishioro, 2013. "Stock Market Development And Economic Growth: Evidence From Zimbabwe," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 22(2), pages 343-360, december.
    • Handle: RePEc:avo:emipdu:v:22:y:2013:i:2:p:343-360
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    References listed on IDEAS

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    1. Levine, Ross & Zervos, Sara, 1998. "Stock Markets, Banks, and Economic Growth," American Economic Review, American Economic Association, vol. 88(3), pages 537-558, June.
    2. Arestis, Philip & Demetriades, Panicos O & Luintel, Kul B, 2001. "Financial Development and Economic Growth: The Role of Stock Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(1), pages 16-41, February.
    3. Demirguc-Kunt, Ash & Levine, Ross, 1996. "Stock Market Development and Financial Intermediaries: Stylized Facts," The World Bank Economic Review, World Bank, vol. 10(2), pages 291-321, May.
    4. Hicks, J. R., 1969. "A Theory of Economic History," OUP Catalogue, Oxford University Press, number 9780198811633.
    5. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    6. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    7. Rousseau, P. L. & Wachtel, P., 2000. "Equity markets and growth: Cross-country evidence on timing and outcomes, 1980-1995," Journal of Banking & Finance, Elsevier, vol. 24(12), pages 1933-1957, December.
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    Cited by:

    1. Lidiya Yemelyanova, 2021. "Relationship Between The Stock Market Development, Banking Sector Development And Economic Growth In The Cee Countries," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 7(3).

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    More about this item

    Keywords

    Stock Market Development; Economic Growth; Causality Tests; Zimbabwe;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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