Revisiting stock market development and economic growth nexus: The moderating role of foreign capital inflows and exchange rates

Hoque, Mohammad Enamul; Yakob, Noor Azuddin

doi:10.1080/23322039.2017.1329975

Cited by 28 publications

(28 citation statements)

References 57 publications

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“…Hsing & Hsieh, 2012;Pradhan et al, 2014Pradhan et al, , 2015. Additionally, foreign exchange rate also has been shown to have a significant influence on stock prices, returns, and market development depending on the economic structure, institutional setting, and trade orientation (Bilson, Brailsford, & Hooper, 2001;Hoque & Yakob, 2017;Hsing & Hsieh, 2012;Pradhan et al, 2014Pradhan et al, , 2015. Focusing on the influence of macroeconomic variable on the Malaysian stock market, Cheah, Yiew, and Ng (2017), Hamidi, Khalid, andKarim (2018) Ibrahim (1999), Ibrahim and Aziz (2003), Ibrahim & Wan Yusoff (2002), and Janor, Rahim, Yaacob, and Ibrahim (2010) among others evidenced that real output, interest rate, money supply, and exchange rate affect stock price and return.…”

Section: Related Existing Studiesmentioning

confidence: 99%

Oil price shocks, global economic policy uncertainty, geopolitical risk, and stock price in Malaysia: Factor augmented VAR approach

Hoque

Wah

Zaidi

2019

Economic Research-Ekonomska Istraživanja

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This article examines the impacts of the geopolitical risk, global economic policy uncertainty, and oil price shocks on stock prices in Malaysia using factor augmented SVAR approach. The findings show that while geopolitical risk has no significant direct impacts on the overall stock market, its indirect impacts are significant and transmitted through the global economic policy uncertainty and oil shocks channels. Global economic policy uncertainty exerts negative effects on the overall stock market and its impacts are magnified by geopolitical risk. Oil related shocks exhibit asymmetric effects on both the aggregated and sectoral stock price. The impacts of oil demand shock on stock price are amplified by global economic uncertainty factor whereas oil supply shocks impacts are amplified by the geopolitical risk factor. At sectoral level, the impacts of all the global shocks vary across different sectors and time. The overall findings imply that global economic policy uncertainty and oil demand shock factors are systematic risk factors that can be employed to forecast stock market returns. The findings also provide implications for policymakers to regulate markets in maintaining financial stability and investors to react to future shocks in these global economic factors with regard to the risks and opportunities.

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Section: Related Existing Studiesmentioning

confidence: 99%

Oil price shocks, global economic policy uncertainty, geopolitical risk, and stock price in Malaysia: Factor augmented VAR approach

Hoque

Wah

Zaidi

2019

Economic Research-Ekonomska Istraživanja

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“…Moreover, private sectors are responsible for the development of a stock market but at the same time the role of the government too cannot be overlooked. However, Hoque and Yakob (2017) examine the stock market development and economic growth nexus and moderating role of foreign capital inflows and exchange rate on the relationship between stock market development and economic growth of Malaysia during 1981-2016. They observe unidirectional effects of stock market development to Malaysian economic growth and there is a long run association between stock market development and economic growth.…”

Section: Review On Secondary Capital Marketmentioning

confidence: 99%

An Analysis of Security Market Growth and Individuals' Investment Decision

Joshi

2019

J. Bus. Soc. Sci. Res.

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The purpose of this study is to analyze the growth of Security Market from FY 2005/06 to FY 2016/17 and to determine the most influencing factor that drive investment decision. The security market growth indicators taken are Market Size and Market Liquidity. To examine the relationship between Investment Decision and influencing factors, factors such as Advocate Recommendation, Personal Financial Needs, Accounting Information, Firm's Image and Neutral Information are taken into consideration. For this study, data are collected both from primary as well as secondary sources. To analyze the growth of stock market, secondary data have been obtained from annual publication of NEPSE, SEBON, MOF etc and statistical analysis like Ratio Analysis (such as MCR and ML), Growth Analysis and Correlation have been applied. For the study of investment decision, primary data have been collected with the sample size of 200. T-test has been applied to examine the relationship between investment decision and influencing factors. The result shows that Nepalese capital market has erratic trend during study period. It implies that capital market is immature and investors are not motivated to invest in the companies. It is also not deniable that the capital market has developed compared to FY 2005/06. Furthermore, Nepalese investors mostly consider firm's reputation in the industry and opinion of firms' majority of stockholder before investing in any stock.

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“…The theory indicates that the nature of the relationship can be unidirectional, bidirectional, or no relationship at all between stock market and growth (Yousif, 2002). The supply side theory suggests a unidirectional effect from stock market toward economic growth (Greenwood & Jovanovic, 1990;Hoque et al, 2017); on the other hand, the demand side theory indicates the unidirectional effects from economic advancement to stock market development (Demetriades & Hussein, 1996;Hoque et al, 2017). However, the feedback hypothesis proposes bidirectional effects between stock market development and economic growth (Bencivenga & Smith, 1991;Demetriades & Hussein, 1996;Greenwood & Smith, 1997) and the alternative hypothesis suggests no-relationship between financial market (stock market) and economic growth (Hoque et al, 2017;Lucas, 1988;Yousif, 2002).…”

Section: Nexus Of Economic Growth and Stock Market Developmentmentioning

confidence: 99%

“…Table 5 presents the long-run coefficients of model A and C. The outputs of model A indicate the existence of positively significant impact of FDI on growth, while SMD has negative but significant effect on growth. The positive relationship between FDI and economic growth is expected, as foreign capital inflows bring economic prosperities to the economy of a country (see Hoque & Yakob, 2017). However, the negative relation between growth and SMD is not expected; as, a wellfunctioning stock market should positively influence economic growth.…”

Section: Bound Testing For Cointegrationmentioning

confidence: 99%

Revisiting endogeneity among foreign direct investment, economic growth and stock market development: Moderating role of political instability

Hoque

Akhter

Yakob

2018

Cogent Economics & Finance

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This study investigates the endogeneity among foreign direct investment, economic growth, and stock market development, along with the moderating role of political instability on the relationship among foreign direct investment, economic growth, and stock market development. The study employs selected macroeconomic variables data for the period of 1993-2016 with Auto Regressive Distributed Lag (ARDL) system and hierarchical regression approach for hypothesis testing. This study discovers that there are short-run and long-run association among economic growth, foreign direct investment, and stock market development. In the long run, only unidirectional relationship exists among economic growth, foreign direct investment, and stock market development. However, in the short-run, bidirectional relationship is evident between economic growth and stock market development. This study reveals that foreign direct investment partially mediates the relationship between economic growth and stock market development; and political instability negatively moderates the economic growth and stock market development nexus, the foreign ABOUT THE AUTHORS

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Revisiting stock market development and economic growth nexus: The moderating role of foreign capital inflows and exchange rates

Cited by 28 publications

References 57 publications

Oil price shocks, global economic policy uncertainty, geopolitical risk, and stock price in Malaysia: Factor augmented VAR approach

Oil price shocks, global economic policy uncertainty, geopolitical risk, and stock price in Malaysia: Factor augmented VAR approach

An Analysis of Security Market Growth and Individuals' Investment Decision

Revisiting endogeneity among foreign direct investment, economic growth and stock market development: Moderating role of political instability

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