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

Author

Listed:
  • Muhammad Azam

    (School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia, Kedah, Malaysia,)

  • 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.)

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.

Suggested Citation

  • Muhammad Azam & Muhammad Haseeb & Aznita Binti Samsi & Jimoh Olajide Raji, 2016. "Stock Market Development and Economic Growth: Evidences from Asia-4 Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 1200-1208.
    • Handle: RePEc:eco:journ1:2016-03-50
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    More about this item

    Keywords

    Economic Growth; Stock Market; Autoregressive Distributed Lag Model; Asia-4 Countries;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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