Stock market development economic growth

Today, the NSE has twelve functional trading floors, namely: To determine this relationship I performed an econometric analysis of our stock market to see whether its development really does stimulate economic growth or vice versa in Jamaica.

The body of theoretical work suggests that stock market development is multi-faced, involving issues of market size, market liquidity, market concentration and integration with world capital markets Levine and Zervos, Critics of Stock Market Development and Economic Growth A number of economists have suggested that the existence of stock market has little relevance to real economic activity.

There was a problem providing the content you requested

Hence it provides the avenue through which the government and corporate bodies raise fresh funds for development purposes. To broaden share ownership practice. Information acquisition about firms; e.

Additional Information Abstract In the recent past, with the phenomenal growth of equity markets, a burgeoning number of policy makers and researchers began to query about the possible impact that equity market development might have on economic growth. These investments are either used by developed firms to enhance their productivity and profitability which, in turn, benefits the domestic economy through increased employment, exports, or even through more competitive prices or by new firms to increase their domestic competitiveness and create a capital base upon which they expand.

I will be focusing on the stock market aspect of financial development in this piece.

Stock Market Development: Its Impact on the Economic Growth in Nigeria

Contrary to the above findings, Nyong who developed an aggregate index of capital market development which he used to determine the relationship with long run growth in Nigeria from — 94, found that capital market development is negatively and significantly correlated with long run growth in Nigeria.

To this end, this paper analyzes the relationship between stock market development, banking development and economic growth in a unified framework using semi-annual data for the periodthrough a dynamic Vector Error Correction Model VECM. The supply-leading hypothesis, however, states that causality runs from financial development to economic growth; emphasising that a well-developed financial system reduces informational asymmetries and increases the overall efficiency in which scarce funds flow from savers to productive investments.

Hence it provides the avenue through which the government and corporate bodies raise fresh funds for development purposes. A developed stock market mobilises more domestic savings and aids in the efficient allocation of these savings to productive investments. The presumption is that, if management does not maximize firm value, another economic agent may take control of the firm, replace management and reap the gains from the efficient firm.

Legislative Regulation of the NSE By legislative regulation, we imply the relevant laws regulating the operation of or transactions on the Nigeria Stock Exchange. To protect investors against fraudulent practices. Such consciousness which is likely to cause a company to be better managed may not doubt be transmitted into the wider macroeconomic management and consequently lead to economic development in the country.

To monitor the activities of the Nigerian Stock Exchange Trading floors in order to ensure orderly, fair and equitable dealings in securities to forestall illegal deals; iv.

There was a problem providing the content you requested

In larger, more liquid markets, it will be easier for an investor who has gotten information to trade at posted prices. How, you may ask.

The Nigerian stock exchange is governed by a council Board of the stock exchange, which is the highest policy making body of the exchange Alile and Anao, Furthermore, the equally weighted index showed that stock market liquidity and stock market sectoral indices were alternative measures of stock market activities.

Critics of Stock Market Development and Economic Growth A number of economists have suggested that the existence of stock market has little relevance to real economic activity. On the other hand, the developmental functions of the SEC involve: The methodology incudes unit root testing in the presence of structural breaks and the Autoregressive distributed lag ARDL model.

On Stock Market Development, Banks & Growth 45 between the stock and currency markets in the wake of unfavourable economic shocks may exacerbate macroeconomic instability and reduce long-term growth.

Stock Market Development: Its Impact on the Economic Growth in Nigeria

stock market development and economic growth in France for the period and have documented that economic growth has a positive effect on the stock market development.

To determine this relationship I performed an econometric analysis of our stock market to see whether its development really does stimulate economic growth or vice versa in Jamaica.

Since stock market activity stimulates economic growth and in turn stock market development is stimulated by economic growth, investment and other efficiency measures that induce greater liquidity and active trade can be implemented with prospect of increased economic growth.

growth. The results are consistent with theories that imply a positive relationship between stock market development and long-run economic growth. The results are inconsistent with theories that predict no correlation or a negative association between stock market development and economic performance.

As such, when the relationship between economic growth and stock market development indicators is subjected to analysis, findings show that stock market development indicators explain variation in economic growth rates even at the sector level.

Stock market development economic growth
Rated 0/5 based on 55 review
The relationship between stock market development and economic growth