Relationship between Singapore stock market and its economic growth / Eliza Shafiqa Ishak

This study examines the relationship between Singapore stock market and its economic growth. The dependent variable of this study is Gross Domestic Product (GDP) and independent variables are market capitalization derived as a percentage of GDP is used as a proxy for stock market size, whereas stock market liquidity is the stock traded, turnover ratio value share derived as a percentage of GDP. To measure the financial intermediary development, domestic credit to the private sector divided by GDP will be used because this variable measures the role of banks in provision of longer-term financing to private corporations. Foreign direct investment will be used because FDI is increasingly being recognized as a major source of economic development. Lastly, Singapore Straits Times Index will be used as indicator for Singapore stock market performance. The data consist of 30 observations annually from 1987 until 2016. This study used quantitative secondary data that is time-series data and multiple regression models represented by the ordinary least squares (OLS) to examine the relationship between Singapore stock market and its economic growth. The results from this study reveal that stock market size, stock market liquidity and financial intermediary have significant relationship with economy growth whereas foreign direct investment and Singapore Straits Times Index do not have significant relationship with economic growth in Singapore.