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Endogenous growth and Stock Market Development

Author

Listed:
  • Guglielmo Maria Caporale,

    (South Bank University London)

  • Peter G. A Howells,

    (University of the West of England)

  • Alaa M. Soliman,

    (Leeds Metropolitan University)

Abstract

This paper re-examines the relationship between stock market development and economic growth. It provides a theoretical basis for establishing the channel through which stock markets affect economic growth in the long run. It examines the hypothesis of endogenous growth models that financial development causes higher growth through its influence on the level of investment and its productivity. The empirical part of this study exploits techniques recently developed to test for causality in VARs. The evidence obtained from a sample of four countries suggests that investment productivity is the channel through which stock market development enhances the growth rate in the long run.

Suggested Citation

  • Guglielmo Maria Caporale, & Peter G. A Howells, & Alaa M. Soliman,, 2003. "Endogenous growth and Stock Market Development," Working Papers 0302, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    • Handle: RePEc:uwe:wpaper:0302
    as

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    File URL: http://carecon.org.uk/DPs/0302.pdf
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    References listed on IDEAS

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    Cited by:

    1. , Aisdl, 2019. "Stock Market And Economic Growth In Vietnam," OSF Preprints ucbhp, Center for Open Science.
    2. Wycliffe Mukulu Musyoka & Evans Geoffrey Mogeni & David Musimbi Murunga & Pollyne Mbithe Mutunga, 2018. "Effect of Stock Market Development on Economic Growth: A Case of Nairobi Securities Exchange, Kenya," Noble International Journal of Economics and Financial Research, Noble Academic Publsiher, vol. 3(5), pages 59-70, May.
    3. Md. Qamruzzaman & Jianguo Wei, 2018. "Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model," IJFS, MDPI, vol. 6(3), pages 1-30, August.

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    More about this item

    Keywords

    Financial Development; Endogenous Growth; Stock Market; Channel of Transmission; Causality Testing in VARs;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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