Substitution or complementary effects between banking and stock markets: Evidence from financial openness in Taiwan

Cheng, Su-Yin

doi:10.1016/j.intfin.2012.01.007

Cited by 52 publications

(43 citation statements)

References 51 publications

(87 reference statements)

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“…In contrast, more liquid stock markets reduce disincentives to long run investment, since liquid markets provide a ready exit-option for investors. This could boost more efficient resource allocation and faster economic growth (Cheng, 2012;Torre et al, 2007). The other indicators used in this study are broad money supply (MOS), inflation and economic growth.…”

Section: Database and Methods Of Studymentioning

confidence: 99%

The impact of stock market development and inflation on economic growth in India: evidence using the ARDL bounds testing and VECM approaches

Pradhan

Filho

Hall

2014

IJEBR

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This paper investigates the impact of stock market development, money supply and inflation on economic growth in India during the post-globalisation era of the 1990s, especially during the period from 1994 to 2012. Using autoregressive distributive lag (ARDL) bounds testing approach, the study finds stock market development, money supply, inflation and economic growth are cointegrated, suggesting the presence of a long-run equilibrium relationship between them. The vector autoregressive error correction model (VECM) further confirms the existence of both bidirectional and unidirectional causality between economic growth, money supply, inflation and stock market development in India. The policy implication of this study is that inflation and money supply can be considered a policy variable to predict both economic growth and stock market development in the Indian economy during the post globalisation era.

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Section: Database and Methods Of Studymentioning

confidence: 99%

The impact of stock market development and inflation on economic growth in India: evidence using the ARDL bounds testing and VECM approaches

Pradhan

Filho

Hall

2014

IJEBR

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“….The rank of  shows the number of independent cointegrating vectors (Cheng, 2012). To find the optimal lag, the SchwarzBayesian and Akaike Information Criteria are employed.…”

Section: Johansen Cointegration Testmentioning

confidence: 99%

“…Nevertheless, most studies showed the separate effectiveness of these markets on economic growth and ignored the interaction between credit and equity markets (Cheng, 2012). Anvari Rostami and Lari Semnani (2007) investigated the relation between the investment in bank deposits and bonds with tendency toward investment (Liquidity and capitalization) in Tehran Stock Exchange.…”

Section: Introductionmentioning

confidence: 99%

“…Arestis et al (2001) found that banking sector and stock market have a great role in the economic growth. Another study by Cheng (2012) revealed that the substitution between credit and equity market is improved following financial openness.…”

Section: Introductionmentioning

confidence: 99%

“…Therefore, banks have developed along with stock markets in such a manner that both lead to economic growth which shows that both are complements each other. The researchers followed Boyed and Smith (1996), Demirguckunt and Maksimovic (1996) and Cheng (2012) to investigate the interaction between credit and equity markets by referring to the relation between economic growth and the debt-to-equity ratio. The economy develops beside increases (decreases) in the debt-toequity ratio supporting the assertion that the two sources of finance are complements (substitutes) (Cheng, 2012).…”

Section: Introductionmentioning

confidence: 99%

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Banking and Stock Markets in Iran: Are They Complements or Substitutes

Ghiasi¹,

Mohseni²,

Shirazi³

2014

isader

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In this study, the quarterly data from 1991:4 to 2011:3 have been used to investigate the effect of the relation between banking sector and stock market on economic growth in Iran. The break point obtained by Gregory and Hansen (1996) appears in the first quarter of 2005, which coincides with the period of the remarkable increase in oil and gas revenues. The results of Johansen test shows that higher export income in Iran decreases the substitution of banking and stock market. On the other hand, the relation between turnover and real output decreases after the break point. In addition, the relation between real output and the volatility is negative which reveals that the stock market volatility is a destructive factor for the economic growth. After the break point, considering bonds in the model does not change the results. However, it is a complementary relation between banking sectors and stock markets before the break point.

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Stock market development and nexus of market liquidity: The case of Fiji

Saliya

2020

Int. J Fin Econ

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The purpose of this paper is twofold: First, to explore the macroeconomic and institutional factors influencing stock market development (SMD) in Fiji during the period 1996–2018 and second, to explore the causes of the prolonged sluggish nature of the South Pacific Stock Exchange (SPX) in Fiji. A mixed‐method approach was employed: autoregressive distributed lag (ARDL) testing framework was used to estimate the influence of the structural determinants in Fiji while descriptive and narrative analysis was used to explain the status of the SPX. The study findings partially confirmed the findings of previous studies. The findings that economic growth promotes SMD while inflation is negatively correlated to SMD were consistent with previous findings. However, the finding that regulatory quality and banking sector development have negative impacts on SMD was contrary to the findings of previous studies. Many determinants, which have been shown to have significant impact on SMD in other studies, did not show any significant impact on the SPX in the Fijian context, particularly the stock market liquidity showed no correlation to SMD and not distributed normally. Exploration of the nexus of the market liquidity reveals that present regulatory conditions are not conducive for the stock market to be vibrant and suggests eliminating excessive paperwork and entry restrictions are critical, not only to attract new players to the market but also to increase trading volumes. We argue that the concentration of ownership and market disintegration resulted in the current sluggish status of the SPX.

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Substitution or complementary effects between banking and stock markets: Evidence from financial openness in Taiwan

Cited by 52 publications

References 51 publications

The impact of stock market development and inflation on economic growth in India: evidence using the ARDL bounds testing and VECM approaches

The impact of stock market development and inflation on economic growth in India: evidence using the ARDL bounds testing and VECM approaches

Banking and Stock Markets in Iran: Are They Complements or Substitutes

Stock market development and nexus of market liquidity: The case of Fiji

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