Does stock market development affect economic growth? Econometric evidence from Bangladesh / Abdullahil Mamun ... [et al.]

Mamun, Abdullahil and Basher, Shahanara and Hoque, Nazamul and Ali, Md Hasmat (Dr.) (2018) Does stock market development affect economic growth? Econometric evidence from Bangladesh / Abdullahil Mamun ... [et al.]. Management & Accounting Review (MAR), 17 (1): 7. pp. 123-144. ISSN 2550-1895


The study aims to evaluate the causality linkage between  stock market development (SMD) and growth of the economy  in Bangladesh. Using time series data of quarterly frequency through 2000Q1-2017Q4 and employing the Johansen cointegration approach the study reveals that there  are  long-run co-integrating relationships among the variables, namely, GDP, development of the stock market, net interest spread, real effective exchange rate and financial depth. The Vector Error Correction Model (VECM) confirms the presence of a long-term equilibrium relationship between GDP and other variables such as regressors as the system is found to be stable in the long-run. As revealed from the study, the short run positive impact of SMD on the growth of the Bangladesh economy sustains in the long run, which is also true for financial depth. However, financial deepening has a relatively large contribution to the output growth of Bangladesh than SMD. Granger causality tests assert that the causal association is unidirectional that runs from SMD to output growth.


Item Type: Article
Email / ID Num.
Mamun, Abdullahil
Basher, Shahanara
Hoque, Nazamul
Ali, Md Hasmat (Dr.)
Subjects: H Social Sciences > HB Economic Theory. Demography > Mathematical economics. Quantitative methods
H Social Sciences > HD Industries. Land use. Labor > Labor. Work. Working class > Industrial sociology. Social conditions of labor
Divisions: Universiti Teknologi MARA, Shah Alam > Accounting Research Institute (ARI)
Journal or Publication Title: Management & Accounting Review (MAR)
UiTM Journal Collections: UiTM Journal > Management & Accounting Review (MAR)
ISSN: 2550-1895
Volume: 17
Number: 1
Page Range: pp. 123-144
Keywords: Stock Market, Market Capitalization, Economic Growth, Granger Causality
Date: April 2018
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