Impact of Stock Market Development on Economic Growth in BRICS

Abstract

The study examines Stock Market development and economic growth in BRICS, Quarterly time series data for the period 1994QI to 2015Q4 were sourced from World Bank Indicator. The Panel Least Squares based on the fixed effect estimation was employed to determine how stock market development impacts on the economic growth of BRICS. Diagnostics tests were conducted to ascertain the robustness and stability of the regression results. The findings reveal that stock market development exerts significant impact on the economic growth. The study revealed that there is a positive correlation between stock market development indicators and BRICS’s economic growth. The study recommends that the weakness of each of the BRICS member country should be taken as policy focus and strategies necessary to strengthen them should be swiftly applied by the governments.

Impact of Khartoum Stock Exchange Market Performance on Economic Growth: An Autoregressive Distributed Lag ARDL Bounds Testing Model

“…This result indicates that, in the long term, a 1% increase in STV would reduce economic growth by 4.52%. This result supports the previous findings by Pan and Mishra (2018) and Osamwonyi and Kasimu (2013) and is in contrast with those made by Osaseri and Osamwonyi (2019), Rezina et al (2017) and Ishioro (2013). TR doesn't affect significantly on economic growth.…”

“…The MC coefficient has statistical significance at the 0.01 level; in the long term, a 1% increase in MC would increase economic growth by 1.16%. The result shows that market capitalization has a positive impact on economic growth in Sudan, supporting the previous findings by Osaseri and Osamwonyi (2019), Mamun et al (2018), Bayar et al (2014), Abdalla (2011), Ishioro (2013), Ngare et al (2014) and Enisan and Olufisayo (2009). The Enisan and Olufisayo (2009) study supports our study in the relationship between stock market and growth, as in the case of Nigeria.…”

“…TR doesn't affect significantly on economic growth. This result go in contrast of Osaseri and Osamwonyi (2019), Pan and Mishra (2018), Osamwonyi and Kasimu (2013), and Ishioro (2013).…”

“…In the study by Osaseri and Osamwonyi (2019), the authors used quarterly data for the period 1994-2015. Moreover, they used the panel least squares approach based on a fixed estimation model.…”

Long and Short Run Relationship between Stock Market Development and Economic Growth in Nigeria

“…The findings was corroborated by Ogochukwu and Raifu (2017) who explored fixed effect model and submitted that African economic growth is significantly and directly influenced by stock market measures. Quarterly data frequency and Panel estimation technique are used by Osaseri and Osamwonyi (2019) who submitted that market and economic growth in BRICS are positively correlated while the former has significant impact on the later. Conversely, Agu (2018) reported that market capitalization negatively impact GDP in Nigeria using OLS.…”