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. 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).
    6. Sin-Yu Ho & N.M. Odhiambo, 2018. "Analysing the macroeconomic drivers of stock market development in the Philippines," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1451265-145, January.
    7. 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.
    8. Chu, Lan Khanh & Chu, Hung Viet, 2020. "Is too much liquidity harmful to economic growth?," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 230-242.
    9. repec:zbw:bofitp:2002_014 is not listed on IDEAS
    10. Baotai Wang & D. Ajit, 2013. "Stock Market and Economic Growth in China," Economics Bulletin, AccessEcon, vol. 33(1), pages 95-103.
    11. Nikolaos Giannellis & Angelos Kanas & Athanasios P. Papadopoulos, 2010. "Asymmetric Volatility Spillovers between Stock Market and Real Activity: Evidence from the UK and the US," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 57(4), pages 429-445, December.
    12. GIRI A. K. & JOSHI Pooja, 2017. "The Impact Of Macroeconomic Indicators On Indian Stock Prices: An Empirical Analysis," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 12(1), pages 61-78, April.
    13. 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.
    14. Muhsin KAR & Saban NAZLIOGLU & Huseyin AGIR, 2014. "Trade Openness, Financial Development, and Economic Growth in Turkey: Linear and Nonlinear Causality Analysis," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 8(1), pages 63-86.
    15. Ho, Sin-Yu, 2017. "The Macroeconomic Determinants of Stock Market Development: Evidence from Malaysia," MPRA Paper 77232, University Library of Munich, Germany.
    16. Philip Arestis & Ambika D. Luintel & Kul B. Luintel, 2004. "Does Financial Structure Matter?," Finance 0401006, University Library of Munich, Germany.
    17. John C. Anyanwu, 1998. "Stock Market Development And Economic Growth in Nigeria," Vision, , vol. 2(1), pages 33-38, January.
    18. Yilmaz Bayar & Abdulkadir Kaya & Murat Yildirim, 2014. "Effects of Stock Market Development on Economic Growth: Evidence from Turkey," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(1), pages 93-100, January.
    19. Rudra P. Pradhan & Mak B. Arvin & John H. Hall, 2019. "The Nexus Between Economic Growth, Stock Market Depth, Trade Openness, And Foreign Direct Investment: The Case Of Asean Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(03), pages 461-493, June.
    20. R. I. Udegbunam, 2002. "Openness, Stock Market Development, and Industrial Growth in Nigeria," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 41(1), pages 69-92.
    21. Sin-Yu Ho, 2018. "Determinants of economic growth in Hong Kong: The role of stock market development," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1510718-151, January.

    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://www.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.