scholarly journals DOES STOCK MARKET DEVELOPMENT PLAY ANY ROLE IN THE EFFECT OF FDI ON ECONOMIC GROWTH IN NIGERIA? AN EMPIRICAL INVESTIGATION

2016 ◽  
pp. 51-61
Author(s):  
Oziengbe Scott Aigheyisi
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Time Series Data ◽  
Ordinary Least Squares ◽  
Growth Effect ◽  
Market Development ◽  
Series Data ◽  
Domestic Investment ◽  
Government Consumption ◽  
Stock Market Development

The objective of the paper is to investigate whether stock market development plays any role in the effect of foreign direct investment (FDI) on economic growth in Nigeria. Using annual time series data that span the period from 1981 to 2014, and employing the fully modified ordinary least squares (FMOLS) estimation technique, the empirical evidence indicates that FDI, domestic investment and stock market development positively and significantly affect economic growth, but the effect of the interaction between stock market development and FDI on economic growth is negative and significant, indicating that the Nigerian bourse is not yet fully developed to engender positive growth effect of FDI. The study further finds that government consumption expenditure and trade openness adversely affect the growth of the country’s real GDP per capita. Recommendations of the paper include efforts by the government to design and implement programmes and policies aimed at enhancing the attractiveness of the country to foreign and local investors, efforts by capital market regulators to enhance stock market efficiency, reduction of government consumption expenditures and import control.

scholarly journals Impact of Stock Market Development on Economic Growth in BRICS

2018 ◽  
Vol 10 (1) ◽  
pp. 23
Author(s):  
Godfrey Osaseri ◽  
Ifuero Osad Osamwonyi
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Stock Market ◽  
World Bank ◽  
Time Series Data ◽  
Market Development ◽  
Series Data ◽  
Stock Market Development ◽  
Development Indicators ◽  
Effect Estimation

The study examines Stock Market development and economic growth in BRICS, Quarterly time series data for the period 1994QI to 2015Q4 were sourced from World Bank Indicator. The Panel Least Squares based on the fixed effect estimation was employed to determine how stock market development impacts on the economic growth of BRICS. Diagnostics tests were conducted to ascertain the robustness and stability of the regression results. The findings reveal that stock market development exerts significant impact on the economic growth. The study revealed that there is a positive correlation between stock market development indicators and BRICS’s economic growth. The study recommends that the weakness of each of the BRICS member country should be taken as policy focus and strategies necessary to strengthen them should be swiftly applied by the governments.

scholarly journals Stock market development and economic growth in Tanzania: an ARDL and bound testing approach

2020 ◽  
Vol 5 (3) ◽  
pp. 187-206
Author(s):  
Saganga Mussa Kapaya
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Time Series Data ◽  
Market Development ◽  
Series Data ◽  
Content Type ◽  
Stock Market Development ◽  
Testing Procedures ◽  
Long Run ◽  
Short Run

Purpose The purpose of this paper is to contribute to empirical evidence by recognizing the importance of stock markets in the financial system and consequently its causality to economic growth and vice versa. Design/methodology/approach The study used the autoregressive distribute lag model (ARDL) with bound testing procedures, the sample covered quarterly time-series data from 2001q1 to 2019q2 in Tanzania. Findings The results suggest that stock market development have both negative and positive causality for both short-run dynamics and long-run relationship with economic growth. Economic growth is found to only cause and relate negatively to liquidity both in the short-run and in the long-run. The results show predominantly a unidirectional causality flow from stock market development to economic growth and finds partial causality flow from economic growth to stock market development, as represented by stock market turnover which proxied liquidity. Originality/value The use of quarterly data to reflect more realistically the dynamics of the variables because yearly data may sometimes cover-up specific dynamics that may be useful for prediction and policy planning. The study uses indices to capture general aspects within the stock market against economic growth as an intuitive way to aggregate the stock market development effects.

Stock Market Development and Economic Growth: Empirical Evidence from Nepal

2021 ◽  
pp. 097215092110168
Author(s):  
Jeevan Kumar Bhattarai ◽  
Ramji Gautam ◽  
Keshab Khatri Chettri
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Time Series Data ◽  
Control Variable ◽  
Market Development ◽  
Series Data ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Testing Procedures ◽  
Distributed Lag

This study examines the relationship between stock market development and economic growth in Nepal by employing autoregressive distributed lag (ARDL) model with bound testing procedures. The study period covers annual time series data from 1994 to 2019. Indicators of the stock market development used are size, depth and efficiency represented by market capitalization as a percentage of gross domestic product (GDP), total value of shares traded as a percentage of GDP and total shares traded as a percentage of market capitalization, respectively. Following high correlations among these indicators, an aggregated index is constructed and used in the study. Real GDP per capita growth is taken as an economic growth indicator. The results suggest that there exists a long-run uni-directional causality relationship running from stock market development index to economic growth. Stock market size and liquidity are significant contributors, showing that stock market is able to mobilize capital and diversify risks with increased easiness in trading of stocks. The control variable market inflation shows no significant impact on either of the examined primary variables.

scholarly journals Stock Market Development And Economic Growth In Hong Kong: An Empirical Investigation

2012 ◽  
Vol 11 (7) ◽  
pp. 795 ◽  
Author(s):  
SY Ho ◽  
NM Odhiambo
Keyword(s):  
Economic Growth ◽  
Hong Kong ◽  
Stock Market ◽  
Time Series Data ◽  
Market Development ◽  
Series Data ◽  
Stock Market Development ◽  
Long Run ◽  
Short Run ◽  
Market Capitalisation

This paper examines the relationship between stock market development and economic growth using time-series data from Hong Kong. The study uses three proxies of stock market development, namely: stock market capitalisation, stock market traded value, and stock market turnover. Given the weaknesses associated with the traditional co-integration techniques, the current study uses the recently introduced ARDL-bounds testing approach to examine the nexus between stock market development and economic growth in a dynamic setting. The empirical results show that the direction of causality between stock market development and economic growth depends on the proxy used to measure the level of stock market development. When stock market capitalisation is used as a proxy for stock market development, a distinct unidirectional causal flow from stock market development to economic growth is found to prevail, without any feedback. However, when stock market turnover is used, a causal flow from economic growth to stock market development is found to prevail in the short run and in the long run, while a causal flow from stock market development to economic growth is only found in the short run. The causality between stock market traded value and economic growth, however, failed to yield any long-run causal relationship from either direction. Only a short-run causality flow from economic growth to stock market traded value could be detected in this case.

scholarly journals Stock market development, foreign capital inflows and economic growth in Zimbabwe: A multivariate causality test

2012 ◽  
Vol 9 (2) ◽  
pp. 313-322
Author(s):  
Kunofiwa Tsaurai ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Time Series Data ◽  
Capital Inflows ◽  
Market Development ◽  
Series Data ◽  
Causality Test ◽  
Stock Market Development ◽  
Foreign Capital Inflows ◽  
Variable Bias

In this study we examine the dynamic nexus between stock market development and economic growth – using time-series data from Zimbabwe. The causal relationship between stock market development and economic growth has been a subject of extensive debate in recent years. In an attempt to address the omission-of-variable bias, which has not been addressed by many previous studies, we have incorporated savings as a third variable in the bivariate setting between stock market development and economic growth – thereby creating a multivariate simulation. The study uses the Johansen–Juselius (Johansen and Juselius, 1990) (maximum likelihood) and a dynamic specification model to examine this linkage. The empirical results reveal that there is a distinct causal flow from stock market development to economic growth – without any feedback in Zimbabwe. The results also show that there is a unidirectional causal flow from savings to economic growth, and from stock market development to savings.

scholarly journals Stock Market and Economic Development: a Causality Test

2007 ◽  
Vol 3 (1) ◽  
pp. 36-44 ◽  
Author(s):  
Surya Bahadur G.C. ◽  
Suman Neupane
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Stock Market ◽  
Time Series Data ◽  
Series Data ◽  
Causality Test ◽  
Stock Market Development ◽  
Business Studies ◽  
Long Run ◽  
Made In

ABSTRACT An attempt has been made in this paper to examine the existence of causality relationship between stock market and economic growth based on the time series data for the year 1988 to 2005 using Granger causality test. The study finds the empirical evidence of long-run integration and causality of macroeconomic variables and stock market indicators even in a small capital market of Nepal. The causality has been observed only in real terms but not in nominal variables. In econometric sense, it depicts that the stock market plays significant role in determining economic growth and vice versa. Interestingly, the causation is evident with a lag of 3 to 4 years. Also, the paper reveals the importance of stock market development for fostering economic development. Journal of Nepalese Business Studies 2006/III/1 pp. 36-44

scholarly journals The Impact of Stock Market Development on Economic Growth: The Case of Botswana

2019 ◽  
Vol 11 (12) ◽  
pp. 149
Author(s):  
Ishmael Radikoko ◽  
Shadreck A. Mutobo ◽  
Mphoeng Mphoeng
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Market Development ◽  
Series Data ◽  
Strong Positive Correlation ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Turnover Ratio ◽  
The Government ◽  
The Impact

This study examines the impacts of the stock market development on economic growth using Botswana as a case study. The study uses times series data covering a decade from 2006 to 2016. The method of analysis used is the Auto regressive distributed lag (ARDL) bounds model. The stock market capitalization ratio (MCR) was used as a proxy for market size while value of shares traded ratio (ST) and Turnover ratio (TR) were used as a proxy for liquidity, collectively representing stock market development. Real gross domestic product (GDP) growth rate was used to represent economic growth .The results show that market capitalization and turnover ratio have a negative correlation with economic growth, while the value of shares traded has a strong positive correlation with economic growth. This result implies that liquidity has propensity to stimulate economic growth in Botswana. The results of this study also found that there exists no causality relationship between stock market development and economic growth. The government should make policies that boost the interest of domestic investors in Botswana as this might spur investors’ interest and boost stock market activity which will improve liquidity and therefore stimulate economic growth.

Interest Rate, Foreign Exchange Rate, and Stock Market Development in Nigeria

2018 ◽  
Vol 9 (3) ◽  
pp. 247-253 ◽  
Author(s):  
Edward Adedoyin Adebowale ◽  
Akindele Iyiola Akosile
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Stock Market ◽  
Foreign Exchange ◽  
The United States ◽  
Ordinary Least Squares ◽  
Foreign Exchange Rate ◽  
Market Development ◽  
National Bureau ◽  
Stock Market Development

This research investigated the effect of interest rate and foreign exchange rate on stock market development in Nigeria. This research was centered on two research problems. First, it was whether interest rate had a significant effect on stock market development in Nigeria. Second, it was whether foreign exchange rate had a significant impact on stock market development in Nigeria. The scope of the research covered the period from 1981 to 2017. Data for this period were chosen because it covered pre and post-liberalization periods of Nigerian financial system. This research made use of ex post facto research design. Secondary data were sourced from Nigerian Stock Exchange reports, Central Bank of Nigeria statistical bulletins, and National Bureau of Statistics publications. Data were collected on Stock Market Capitalization (SMC), Prime Lending Rate (PLR) and Real Exchange Rate (RER) (Nigerian Naira in relation to American Dollars of the United States). Data analysis was carried out with Ordinary Least Squares (OLS) and Cochrane-Orcutt Iterative techniques. The findings reveal that interest rate has a significant negative effect, and foreign exchange rate has a significant positive effect on Nigerian stock market development during the period covered. It is suggested that monetary authorities should strive to formulate policies that will make interest and foreign exchange rates stable, competitive, and at a level that will stimulate the investment of funds in the stock market.

Stock Market Development And Economic Growth in Nigeria

1998 ◽  
Vol 2 (1) ◽  
pp. 33-38 ◽  
Author(s):  
John C. Anyanwu
Keyword(s):  
Economic Growth ◽  
Risk Management ◽  
Stock Market ◽  
Conceptual Framework ◽  
Corporate Control ◽  
Market Development ◽  
Political Environment ◽  
Stock Market Development ◽  
Long Run

Is the stock market development important for economic growth in Nigeria? One line of research argues that it is not; another line stresses the importance of stock market development in allocating capital, acquisition of information about firms, easing risk management, mobilization of savings, and exerting corporate control. Indeed, some theories provide a conceptual framework for the belief that larger, more efficient stock markets boost economic growth. This article examines whether there is a strong empirical association between Nigerian stock market development and long-run economic growth. Our empirical results suggest that the Nigerian stock market development is positively and strongly associated with long-term economic growth. This implies that Nigerian policymakers should make concerted efforts at removing obstacles to stock market development while creating and sustaining an enabling macroeconomic and political environment for the market’s development.

Sign in / Sign up

Export Citation Format

Share Document