Bond Market Development, Economic Growth and Other Macroeconomic Determinants: Panel VAR Evidence

Pradhan, Rudra P.; Arvin, Mak B.; Bennett, Sara E.; Nair, Mahendhiran; Hall, John H.

doi:10.1007/s10690-016-9214-x

Cited by 22 publications

(7 citation statements)

References 58 publications

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“…Development economics studies four types of relationships: firstly, the link between banking sector development and economic growth (Christopoulos and Tsionas, 2004;Tang, 2005;Moshirian and Wu, 2012;Menyah et al, 2014;Pradhan et al, 2014b); secondly, the link between stock market development and economic growth (Akinlo and Akinlo, 2009;Kar et al, 2011;Pradhan et al, 2013a;Pradhan et al, 2014a), thirdly, the link between bond market development and economic growth (Fink et al, 2006a(Fink et al, , 2006bMatei, 2013;Puente-Ajovin and Sanso-Navarro, 2015;Pradhan et al, 2016), and fourthly, the link between insurance market development and economic growth (Avram et al, 2010;Han et al, 2010;Chen et al, 2012;Lee et al, 2013;.…”

Section: An Overview Of Financial Development and Economic Growthmentioning

confidence: 99%

Finance and growth: Evidence from the ARF countries

Pradhan

Arvin

Bahmani

et al. 2017

The Quarterly Review of Economics and Finance

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Highlights • We assess the causal relationship between economic growth, and four different types of financial development. • The empirical investigation follows ASEAN Regional Forum countries between 1991 and 2012. • We use a panel vector autoregressive model for detecting the direction of causality between these variables. • The study demonstrates both unidirectional and bidirectional causality between these variables.

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Section: An Overview Of Financial Development and Economic Growthmentioning

confidence: 99%

Finance and growth: Evidence from the ARF countries

Pradhan

Arvin

Bahmani

et al. 2017

The Quarterly Review of Economics and Finance

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“…In particular, Thumrongvit et al (2013) provide empirical evidence about the positive effect of government bond markets on economic growth by using a panel of 38 developed and developing countries. Similarly, Pradhan et al (2016) find a positive relationship between bond markets and economic growth by using sample of 35 countries, while Fink et al (2003) show that development of bond markets significantly affects real economic activity in leading world economies (the USA, most of the European Union members, Japan, Switzerland and Norway). Those findings support the argument that bond market development increases the liquidity and size of the capital markets, and thus it is important for growth (see Wachtel, 2001).…”

mentioning

confidence: 94%

Financial development, government bond returns, and stability: International evidence

Boubaker

Nguyen

Piljak

et al. 2019

Journal of International Financial Markets, Institutions and Mo

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This paper investigates the effect of financial development on government bond returns in developed and emerging markets under different market conditions. Using a quantile regression framework for quarterly panel data from 28 countries over 1999-2015, our results reveal that the effect of financial development on government bond returns (changes in bond prices) differs according to conditions in the market and between developed and emerging markets. The effect is positive and significant only in good market conditions for developed markets. For emerging markets financial development has a positive and significant effect for good market conditions but the effect is negative and significant for bad market conditions.

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“…It can be noted that both stock market development and bond market development have links to economic growth through a variety of sub-connections (Bui et al , 2018; Benczúr et al , 2018; Pradhan et al , 2016a, 2016b; Peregoa and Vermeulena, 2016; Mu et al , 2013; Thumrongvit et al , 2013; Bhattacharyay, 2013; Sophastienphong et al , 2008). Furthermore, the stock market and bond market developments also correlate with each other (Kourtellos et al , 2013; Checherita-Westphal and Rother, 2012; Fink et al , 2003; Rahman and Mustafa, 1997).…”

Section: Introductionmentioning

confidence: 99%

The dynamics of bond market development, stock market development and economic growth

Pradhan

Arvin

Norman

et al. 2019

JEFAS

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Purpose The paper investigates whether Granger causal relationships exist between bond market development, stock market development, economic growth and two other macroeconomic variables, namely, inflation rate and real interest rate. The study aims to expand the domain of economic growth by including a more in-depth analysis of the possible impact that bond market and stock market development has on economic growth than is normally found in the literature. Design/methodology/approach This paper uses a panel data set of the G-20 countries for the period 1991-2016. It uses a panel vector auto-regression model to reveal the nature of any Granger causality among the five variables. Findings The paper provides empirical insights that both bond market development and stock market development are cointegrated with economic growth, inflation rate and real interest rate. The most robust result from the panel Granger causality test is that bond market development, stock market development, inflation rate and real interest rate are demonstrable drivers of economic growth in the long run. Research limitations/implications Because of the chosen research approach, the research results may lack theoretical foundations. Therefore, perhaps the more fully grounded interactive findings of this study can inspire theorists to fill the missing gap. Practical implications This paper includes lessons for policymakers in the G-20 countries seeking to stimulate economic growth in the long run and how they need to ensure greater stability of the interest rate and inflation rate as well as fully developing their financial markets, as both bond markets and stock markets are obvious drivers of economic growth. Originality/value This paper fulfills an identified need to study causal relationships between bond market development, stock market development, economic growth and two other macroeconomic variables, i.e. inflation rate and real interest rate.

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Bond Market Development, Economic Growth and Other Macroeconomic Determinants: Panel VAR Evidence

Cited by 22 publications

References 58 publications

Finance and growth: Evidence from the ARF countries

Finance and growth: Evidence from the ARF countries

Financial development, government bond returns, and stability: International evidence

The dynamics of bond market development, stock market development and economic growth

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