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Corruption and Stock Market Development: Evidence from Asian Countries

Author

Listed:
  • Kelvin Lee Yong Ming*

    (Kolej Sunway Kuching, Malaysia)

  • Mohamad Bin Jais

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Malaysia)

  • Rossazana Abd Rahim

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Malaysia)

  • Ayoib Che-Ahmad

    (Universiti Utara Malaysia)

Abstract

Stock market plays a significant role in corporate financing. However, stock market movements were highly affected by certain external factors such as economic, psychological and political factors. By using the sample of 10 Asian countries, this study intends to investigate the impacts of macroeconomic and corruption factors on the stock market development. The sample period covered from the year 2003 to 2015. The dependent variable used in this study was stock market development. Whilst, the variables of interest used in this study were i) income level, ii) savings, iii) foreign direct investment, iv) value of stocks traded, v) money supply and vi) corruption perception index (CPI). A panel data approach had been applied in testing the relationship between the variables due to the nature of data. As expected, the gross domestic savings, foreign direct investment, and money supply were found to have a significant relationship with stock market development. On the other hand, the income level found to have a significant negative relationship with the stock market development. Noteworthy, the results also indicated that lower corruption level could lead to the growth of stock market development. Thus, a change in corruption level was the important matter to be considered before making any investment decision as corruption level had a significant impact on the stock market development.

Suggested Citation

  • Kelvin Lee Yong Ming* & Mohamad Bin Jais & Rossazana Abd Rahim & Ayoib Che-Ahmad, 2018. "Corruption and Stock Market Development: Evidence from Asian Countries," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 357-362:6.
  • Handle: RePEc:arp:tjssrr:2018:p:357-362
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    Cited by:

    1. Ibrahim Halil Eksi & Berna Dogan, 2020. "Corruption and Financial Development. Evidence from Eastern Europe and Central Asia Countries," Public Finance Quarterly, State Audit Office of Hungary, vol. 65(2), pages 196-209.

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