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Empirical Evidence on the Relationship Between Stock Market Development and Economic Growth: A Cross-Country Exploration in Asia

In: Analytical Issues in Trade, Development and Finance

Author

Listed:
  • J. Felix Raj

    (St. Xavier’s College (Autonomous))

  • Samrat Roy

    (St. Xavier’s College (Autonomous))

Abstract

This chapter examines the causal relationship between stock market development and economic growth for selected Asian economies covering the period from 1980 to 2010. The study has been done for China, India, Pakistan, Sri Lanka, Indonesia, Malaysia, the Philippines and Singapore. The empirical part of this study applies Granger causality technique to arrive at causal relationships between the variables in the study. The evidence obtained from a sample of eight countries suggests that a well-developed stock market can foster economic growth in the long run. It also provides support to theories according to which well-functioning stock markets can promote economic development by fuelling the engine of growth through faster capital accumulation, and by tuning it through better resource allocation.

Suggested Citation

  • J. Felix Raj & Samrat Roy, 2014. "Empirical Evidence on the Relationship Between Stock Market Development and Economic Growth: A Cross-Country Exploration in Asia," India Studies in Business and Economics, in: Ambar Nath Ghosh & Asim K. Karmakar (ed.), Analytical Issues in Trade, Development and Finance, edition 127, chapter 23, pages 395-403, Springer.
    • Handle: RePEc:spr:isbchp:978-81-322-1650-6_23
    DOI: 10.1007/978-81-322-1650-6_23
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