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Stock Market Development and Economic Growth: Empirical Evidence for Emerging Market Economies

Received: 17 March 2014     Accepted: 9 April 2014     Published: 10 April 2014
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Abstract

Contemporary economies of developing countries are changing due to rapid changes in the world economy. The economies of emerging market countries are witnessing changes in the composition of capital flows because world stock markets are expanding rapidly. Foreign direct investment and stock market boom are the indicators of the changing world economic order. The objective of this study is to examine the relationship between stock market development and economic Growth. Empirically, based on the data for 17 emerging market and 10 developed market economies during the 12 years’ period, from 2000 - 2011 using the generalized method of momentum (GMM) for dynamic panel data. To control for the country specific effect, the model is further estimated for the developed and emerging member economies. The key findings of the study reveal that there exists statistically significant relationship between stock market development and economic growth both directly, as well as indirectly by boosting investment behavior. The results also indicate robustly that stock market development is an important wheel for economic growth

Published in International Journal of Economics, Finance and Management Sciences (Volume 2, Issue 2)
DOI 10.11648/j.ijefm.20140202.19
Page(s) 171-181
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Stock Market Development, Economic Growth, Dynamic Panel, Emerging Market and Developed Market Economies

References
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  • APA Style

    Abiy Hailemariam, Chi Guotai. (2014). Stock Market Development and Economic Growth: Empirical Evidence for Emerging Market Economies. International Journal of Economics, Finance and Management Sciences, 2(2), 171-181. https://doi.org/10.11648/j.ijefm.20140202.19

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    ACS Style

    Abiy Hailemariam; Chi Guotai. Stock Market Development and Economic Growth: Empirical Evidence for Emerging Market Economies. Int. J. Econ. Finance Manag. Sci. 2014, 2(2), 171-181. doi: 10.11648/j.ijefm.20140202.19

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    AMA Style

    Abiy Hailemariam, Chi Guotai. Stock Market Development and Economic Growth: Empirical Evidence for Emerging Market Economies. Int J Econ Finance Manag Sci. 2014;2(2):171-181. doi: 10.11648/j.ijefm.20140202.19

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  • @article{10.11648/j.ijefm.20140202.19,
      author = {Abiy Hailemariam and Chi Guotai},
      title = {Stock Market Development and Economic Growth: Empirical Evidence for Emerging Market Economies},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {2},
      number = {2},
      pages = {171-181},
      doi = {10.11648/j.ijefm.20140202.19},
      url = {https://doi.org/10.11648/j.ijefm.20140202.19},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20140202.19},
      abstract = {Contemporary economies of developing countries are changing due to rapid changes in the world economy. The economies of emerging market countries are witnessing changes in the composition of capital flows because world stock markets are expanding rapidly. Foreign direct investment and stock market boom are the indicators of the changing world economic order. The objective of this study is to examine the relationship between stock market development and economic Growth. Empirically, based on the data for 17 emerging market and 10 developed market economies during the 12 years’ period, from 2000 - 2011 using the generalized method of momentum (GMM) for dynamic panel data. To control for the country specific effect, the model is further estimated for the developed and emerging member economies. The key findings of the study reveal that there exists statistically significant relationship between stock market development and economic growth both directly, as well as indirectly by boosting investment behavior. The results also indicate robustly that stock market development is an important wheel for economic growth},
     year = {2014}
    }
    

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    AU  - Abiy Hailemariam
    AU  - Chi Guotai
    Y1  - 2014/04/10
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    PB  - Science Publishing Group
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    AB  - Contemporary economies of developing countries are changing due to rapid changes in the world economy. The economies of emerging market countries are witnessing changes in the composition of capital flows because world stock markets are expanding rapidly. Foreign direct investment and stock market boom are the indicators of the changing world economic order. The objective of this study is to examine the relationship between stock market development and economic Growth. Empirically, based on the data for 17 emerging market and 10 developed market economies during the 12 years’ period, from 2000 - 2011 using the generalized method of momentum (GMM) for dynamic panel data. To control for the country specific effect, the model is further estimated for the developed and emerging member economies. The key findings of the study reveal that there exists statistically significant relationship between stock market development and economic growth both directly, as well as indirectly by boosting investment behavior. The results also indicate robustly that stock market development is an important wheel for economic growth
    VL  - 2
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Author Information
  • School of Business Management, Dalian University of Technology, Dalian, 116024, China

  • School of Business Management, Dalian University of Technology, Dalian, 116024, China

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