IDEAS home Printed from https://ideas.repec.org/a/jda/journl/vol.54year2020issue1pp53-64.html

Determinants of the Brazilian Stock Market Development

Author

Listed:
  • Sheilla Nyasha
  • Nicholas M. Odhiambo

    (University of South Africa, South Africa
    University of South Africa, South Africa)

Abstract

It has become well-known now that stock markets play a key role in stimulating economic growth process. As economists and politicians alike, battle in finding ways of growing economies, it becomes imperative to establish the drivers of stock market development as they have an ultimate bearing on the stimulants of economic growth. In recent years, studies on the stock market determinants have sprung up, however, with results far from being conclusive. What turned out to be determinants in one study may not be in another study. Therefore, in this paper, we examine the key determinants of stock market development in Brazil using annual time-series data spanning from 1980 to 2016. The study was motivated by the growing important role of stock market development in economic development, on the one hand, and the conflicting findings on the determinants of stock market development, on the other hand; coupled with little to no study coverage of the topic on Brazil. Unlike some previous studies that used cross-sectional data, the current study has used time-series techniques that take into consideration the Brazilian country-specific issues. Furthermore, the current study has also employed the ARDL bounds testing procedure to determine the determinants of stock market development in Brazil. This procedure is well known for its superior small sample properties; hence it is considered more suitable for this study. The results of the study reveal that the stock market development in Brazil is positively determined by trade openness, banking sector development and exchange rate, irrespective of whether the analysis is done in the long run or in the short run. Contrary to the results of some previous studies, investment and stock market liquidity are found to have a negative influence on the development of stock market in Brazil – both in the long run and in the short run. The study, therefore, recommends that policies that favour international trade, bank-based financial sector development and exchange rate stability should be pursued in Brazil, as this would translate into further stock market development.

Suggested Citation

  • Sheilla Nyasha & Nicholas M. Odhiambo, 2020. "Determinants of the Brazilian Stock Market Development," Journal of Developing Areas, Tennessee State University, College of Business, vol. 54(1), pages 53-64, January-M.
    • Handle: RePEc:jda:journl:vol.54:year:2020:issue1:pp:53-64
    as

    Download full text from publisher

    File URL: https://muse.jhu.edu/article/722398/pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Emmanuel, Ongo Nkoa Bruno & Thierry, Mamadou Asngar & Christian, Atangana Zambo Charles & Ludé, Djam'Angai, 2024. "What drives financial market growth in Africa?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    2. Candauda Arachchige Saliya, 2022. "Stock market development and nexus of market liquidity: The case of Fiji," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4364-4382, October.

    More about this item

    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
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

    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:jda:journl:vol.54:year:2020:issue1:pp:53-64. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Abu N.M. Wahid (email available below). General contact details of provider: https://edirc.repec.org/data/cbtnsus.html .

    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.