IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v7y2023i3p582-599.html
   My bibliography  Save this article

Stock Market Development and Economic Growth: An Evidence from Six South and Southeast Asian Countries

Author

Listed:
  • S.J.M.N.G. Samarakoon

    (Department of Economics and Statistics, Faculty of Social Sciences and Languages, Sabaragamuwa University of Sri Lanka, Sri Lanka)

Abstract

The study appraised the relationship between stock market development and economic growth in six Asian countries. The study employed collected secondary data from World Bank Indicators of 15 years have been used for the period from 2006 to 2020. The relationship has been measured in terms of market capitalization, total value of stocks traded, stock turnover ratio and volume of the stock market determined through the total number of companies listed in the stock exchange of each country in countries South and Southeast Asian region. By using linear-log model, the study has found out that development of the stock market affects economic growth significantly. The development of the stock market has significant and positive effect on the economic growth of Bangladesh, India, Sri Lanka, Indonesia, Malaysia, and Thailand. Further, in response to the second objective of the research study, the best indicator of the capital market is the Volume of the Stock Market (Listed Domestic Companies), which is highly associated with the real economic growth of Bangladesh, India, Sri Lanka, Indonesia, Malaysia, and Thailand. In addition, the result of the study by employing the stepwise regression analysis shows that the most representative indicator of capital market that is positively associated to the real economic growth of each country is volume of the stock market (Listed Domestic Companies).

Suggested Citation

  • S.J.M.N.G. Samarakoon, 2023. "Stock Market Development and Economic Growth: An Evidence from Six South and Southeast Asian Countries," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(3), pages 582-599, March.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:3:p:582-599
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-7-issue-3/582-599.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/journals/ijriss/articles/stock-market-development-and-economic-growth-an-evidence-from-six-south-and-southeast-asian-countries/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    2. Levine, Ross & Zervos, Sara, 1996. "Stock Market Development and Long-Run Growth," The World Bank Economic Review, World Bank, vol. 10(2), pages 323-339, May.
    3. Godfrey Osaseri & Ifuero Osad Osamwonyi, 2019. "Impact of Stock Market Development on Economic Growth in BRICS," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(1), pages 23-30, January.
    4. Batool K. Asiri & Mohamed A. Abdalla, 2015. "Economic Growth and Stock Market Development in Bahrain," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 5(2), pages 1-5.
    5. P., Srinivasan, 2014. "Stock Market Development and Economic growth in India: An Empirical Analysis," MPRA Paper 55657, University Library of Munich, Germany.
    6. Levine, Ross, 1991. "Stock Markets, Growth, and Tax Policy," Journal of Finance, American Finance Association, vol. 46(4), pages 1445-1465, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hondroyiannis, George & Lolos, Sarantis & Papapetrou, Evangelia, 2005. "Financial markets and economic growth in Greece, 1986-1999," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 15(2), pages 173-188, April.
    2. George Hondroyiannis & Sarantis Lolos & Evangelia Papapetrou, 2004. "Financial Markets and Economic Growth in Greece," Working Papers 17, Bank of Greece.
    3. K. Siva Kiran Guptha & R. Prabhakar Rao, 2018. "The causal relationship between financial development and economic growth: an experience with BRICS economies," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 20(2), pages 308-326, October.
    4. Salvatore Capasso, 2006. "Stock Market Development and Economic Growth: A Matter of Information Dynamics," CSEF Working Papers 166, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    5. Bulent Guloglu, 2003. "Financial Liberalisation and Economic Growth: A Panel Data Approach," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 7(27), pages 35-58.
    6. repec:zbw:bofitp:2002_014 is not listed on IDEAS
    7. Abdullah Bin Omar & Anis Ali & Salma Mouneer & Robina Kouser & Mamdouh Abdulaziz Saleh Al-Faryan, 2022. "Is stock market development sensitive to macroeconomic indicators? A fresh evidence using ARDL bounds testing approach," PLOS ONE, Public Library of Science, vol. 17(10), pages 1-19, October.
    8. Okey O. Ovat, 2014. "Assessing the Extent of Development of the Nigerian Capital Market: A Comparative Analysis," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 2(2), pages 73-81.
    9. Ho, Sin-Yu, 2017. "The Macroeconomic Determinants of Stock Market Development: Evidence from Malaysia," MPRA Paper 77232, University Library of Munich, Germany.
    10. Philip Arestis & Ambika D. Luintel & Kul B. Luintel, 2004. "Does Financial Structure Matter?," Finance 0401006, University Library of Munich, Germany.
    11. Koivu, Tuuli, 2002. "Do efficient banking sectors accelerate economic growth in transition countries?," BOFIT Discussion Papers 14/2002, Bank of Finland Institute for Emerging Economies (BOFIT).
    12. Rangan GUPTA & Roula INGLESI-LOTZ, 2012. "Macro Shocks and Real US Stock Prices with Special Focus on the “Great Recession”," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(2).
    13. Md. Abu HASAN, 2017. "Efficiency and Volatility of the Stock Market in Bangladesh: A Macroeconometric Analysis," Turkish Economic Review, KSP Journals, vol. 4(2), pages 239-249, June.
    14. Pinar Evrim Mandaci, 2003. "Abnormal Return Fluctuations in the ISE (Istanbul Stock Exchange) Before and After the General Elections in Turkey," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 7(27), pages 1-14.
    15. Pooja Joshi & A K Giri, 2015. "Dynamic Relations between Macroeconomic Variables and Indian Stock Price: An Application of ARDL Bounds Testing Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(10), pages 1119-1133, October.
    16. Didier, Tatiana & Levine, Ross & Llovet Montanes, Ruth & Schmukler, Sergio L., 2021. "Capital market financing and firm growth," Journal of International Money and Finance, Elsevier, vol. 118(C).
    17. Rudra P. Pradhan, 2018. "Development of stock market and economic growth: the G-20 evidence," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(2), pages 161-181, August.
    18. Peia, Oana & Roszbach, Kasper, 2015. "Finance and growth: Time series evidence on causality," Journal of Financial Stability, Elsevier, vol. 19(C), pages 105-118.
    19. Durusu-Ciftci, Dilek & Ispir, M. Serdar & Yetkiner, Hakan, 2017. "Financial development and economic growth: Some theory and more evidence," Journal of Policy Modeling, Elsevier, vol. 39(2), pages 290-306.
    20. Christie Dike, 2016. "Stock Market Efficiency Promotes Economic Development: Empirical Evidence from Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 1287-1298.
    21. Sin-Yu Ho, 2019. "The macroeconomic determinants of stock market development in Malaysia: an empirical analysis," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 21(2), pages 174-193.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:7:y:2023:i:3:p:582-599. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.