Stock Market Development Research Articles

Examining the impact of the stock market development on Economic growth- KSA Tadawul.

The relationship between stock market development and economic growth has been a subject of debate, with arguments centered on the impact of a well-functioning stock market on economic growth. This study argues that economic growth is influenced by stock market development and economic reform indicators, while controlling for other determinants of growth. The research employs a comprehensive theoretical framework linking stock market development to economic growth, and it specifically focuses on the Tadawul stock market in Saudi Arabia. The empirical analysis, using sophisticated panel data econometric techniques, reveals a significant positive correlation between Tadawul stock market and economic growth, particularly in the oil sector. This suggests that the Tadawul stock market plays a crucial role in influencing and contributing to economic growth, especially within the context of the oil industry.

Effect of Stock Market Development on Financial Savings in Tanzania: An Empirical Investigation (1999-2023)

The performance of the Dar es Salaam Stock Exchange (DSE) since its inception in 1998 followed liberalization of the financial sector in 1991 has been very positive and has also demonstrated that there is huge untapped potential financial capital within the country. For this reason, this study aimed at investigating the impact of stock market development on financial savings in Tanzania from 1999 to 2023 period using quarterly time series data. The study employs econometric analysis in which the error correction model (ECM) is applied to analyze the financial savings function. The overall significant determinants of financial savings included in the model were statistically significant. The results indicated that real GDP in both long run and short run estimation is relevant variable for explaining the variations in the financial savings in Tanzania whereas stock market in terms market capitalization is relevant variable both in the short-run and long run estimation. There is significant evidence that stock market development in Tanzania has negative effect and that it reduces financial savings function in both short run and long-run via market capitalization. The negative effect of stock market development on financial savings might poses problems to the conduct of monetary policy in Tanzania, by failing to correctly target monetary growth in the economy.

Does Governance Quality Impact Stock Market Development? An Insight of BRICS Economies

Does Governance Quality Impact Stock Market Development? An Insight of BRICS Economies

STOCK MARKET DEVELOPMENT AND ECONOMIC GROWTH: AN ARDL APPROACH

This research project employs the Autoregressive Distributed Lag (ARDL) approach to investigate the intricate relationship between stock market development and economic growth. The primary objective is to systematically analyze the causal links and quantify the impact of key stock market indicators on economic growth, and vice versa. The methodology encompasses a thorough literature review to establish a theoretical framework, followed by the collection and examination of relevant data over a defined timeframe. Unit root tests and cointegration analysis are applied to assess the stationarity and long-term relationships between the variables. The ARDL model is then employed to estimate the dynamic interactions, considering lagged values of the indicators. Diagnostic tests are conducted to ensure the robustness of the findings. The project aims to contribute empirical insights into both short- and long-term dynamics, shedding light on the complex interplay between stock market development and economic growth. The results are expected to offer valuable implications for policymakers and researchers, providing evidence-based guidance for fostering sustainable economic development. Ultimately, this research seeks to advance our understanding of the mechanisms driving economic growth in the context of stock market development. Keywords: Stock Market Development, Economic Growth, ARDL Approach, Causal Relationship, Lagged Variables, Unit Root Tests, Cointegration Analysis, Empirical Insights, Sustainable Economic Development, Policy Implications.

РОЗВИТОК ТА ІНСТИТУЦІЙНІ ТРАНСФОРМАЦІЇ ФОНДОВОГО РИНКУ УКРАЇНИ

The article examines the development and institutional transformations of the Ukrainian stock market. It has been confirmed that in Ukraine there is a pronounced bank-centric nature of the financial system by comparing indicators of the ratio of capitalization of listed companies and bank loans to Ukraine's GDP. It was determined that the Ukrainian stock market during the research period is constantly developing and transforming and attracts the attention of both domestic and foreign investors. Ukraine follows international standards in the field of exchange activity and works to improve the regulatory framework for market development. The most important institutional transformations in the domestic stock market under the influence of legislative changes are characterized. Separate quantitative aspects of the development of the domestic stock market for 2012-2022 were analyzed. It was noted that the transformations of the stock market were characterized not only by changes in the quantitative indicators of the development of the securities market of Ukraine, but also had a significant impact on the institutional, regulatory, intermediary, technical and information infrastructure of the domestic stock market. The most important directions of the transformation of the stock market of Ukraine, in particular of an institutional and digital nature, are substantiated. The key aspects of the transformation of the stock market related to digitalization processes are highlighted: electronic trading is a tool that allows you to trade securities online directly through electronic trading platforms; increasing transparency promotes quick and effective dissemination of information about companies, their financial condition and development prospects; the growing role of robot-advisors who can provide investment advice, analyze markets and predict risks; increasing the availability of services for small investors through digital platforms; changes in the structure of the market due to digital technologies lead to changes in the structure of the stock market, in particular, to an increase in the role of alternative trading platforms and a decrease in the importance of traditional exchanges. In the institutional environment, increased requirements for companies wishing to go through the listing procedure on the stock exchanges contributed to the exit of inefficient and fictitious issuers, ensuring a higher level of investor confidence in the market. However, we note that this has also led to a narrowing of the number of companies willing and able to meet these requirements, which may limit investment opportunities in the market.

Where Risk Policies Going – A Case of Sacombank Vietnam in 2 Periods

In emerging markets such as Vietnam with stock market development, enhancing risk management for big corporation such as banks is vital to survive. We developed our studies from analysis of bank stock price to bank beta CAPM and now is bank cost of equity. Therefore, we select a big bank in Vietnam (STB Sacombank) and one of this study’s purposes is to make Assessment of relation between cost of equity, beta capm and market risk premium in a case of sacombank Vietnam in 2 periods. Our research results tell that: As R, G and VNIdex have positive impact on COE in both periods (see table 11) whereas IM has negative impact on COE (cost of equity) we would suggest that reducing R and G slightly to reduce cost of equity and increasing IM. Finally, because exchange rate has negative impact on COE in both periods while trade balance has positive impact on COE in both stages, we would recommend that increasing exchange rate and reducing trade balance to reduce COE. Therefore, our study can be expanded for other markets.

Factors Influencing Private Equity Investments in Asian Countries

An overview of investment activities of the Asian private equity market is presented in this paper. The study began with a close examination of the movements in the Asian private equity market over the last few years and a comparison of Asian and other developed nations' private equity investing practices. The observation gave rise to a hypothesis that Asian and Western economies may not be directly comparable in terms of their influencing factors. As a result, investigating the variables impacting private equity investments in Asian economies has become the primary research question. The private investment activity of five Asian economies—China, Japan, South Korea, Singapore, and India—between 2010 and 2023 was examined in this study. The total private equity investment value across all five Asian economies' sectors was used to gauge the level of investment activity. The study was based on about three major dimensions: the investment environment, economic conditions and research & development. Eight explanatory variables, including GDP, inflation, interest rates, stock market capitalization, research and development expenditure as a percentage of GDP, and the Intellectual Property Rights Index (IPRI), were included in the dataset. The correlation study between each of the eight variables has been performed before more in-depth analysis. The study was conducted using the regression analysis approach. The analysis identified that IPO, GDP and Research & Development (R&D) have a strong and significant impact on private equity investments, being significant drivers in attracting investments. The inflation has shown least influence on private equity investments. The IPRI index, stock market capitalization and liquidation showed no influence on the private equity investments. Lastly the results are subjected to limited data available about the factors. Keywords: Asian economies, Private equity, Investments

Research on Stock Price Prediction and Quantitative Stock Picking Strategy Based on Deep Learning

With the continuous development of the domestic stock market and the continuous improvement of the financial system system, and at the same time, the domestic stock market gradually rises in the financial system, based on the prediction research of the domestic stock market will become more and more important. In order to solve the problems of low precision and poor accuracy of short-term stock price prediction, this paper selects the bi-directional long- and short-term memory network of attention mechanism (WOA-BiLSTM-Attenion) model under the whale optimization algorithm for stock price prediction. The modeling of bi-directional long- and short-term memory network with attention mechanism can reduce the loss of historical information and increase the influence of important information. On this basis, Whale Optimization Algorithm (WOA) is then used for hyperparameter selection to reduce human interference. The experimental results show that compared with BP, LSTM, BiLSTM, BiLSTM-Attention, the WOA-BiLSTM-Attenion model has a better effect on stock closing price prediction, with a value of 13.9446, and the value of 0.9477, which has a higher accuracy, with a view to providing certain reference for the prediction research in other fields.

Stock market development: building a risk society since 1688

ABSTRACT Created by speculators in Amsterdam in 1602, and unstable ever since, stock markets have become central to economies globally, despite being recognised as a significant contributor to today’s risk society. History exposes questionable reasons for the stock market’s rise and reveals reversion to a more productive economic framework to be a way of reducing societal risk. The stock market’s spontaneous development by opportunists in London following the 1688 ‘Glorious Revolution’ spread a non-essential, localised, and speculative market to the international political economy. This precipitated London’s first Big Bang: the privatisation of the Bank of England and stock market deregulation, followed by the South Sea Bubble within thirty years. Economists subsequently embedded the market in economic theory. Keynes’ re-definition of ‘investment’ to include share trading began an ontological drift that made stock markets a hallmark of capitalism. Unlike Knight, Keynes’ concern was share-trading risk, and the uncertainty of the unknown future remains an unresolved challenge for risk analysts, speculators, and regulators, their conflicting goals militating against regulation and stability. Re-building the successful capitalist framework that was abandoned as share markets attracted unjustifiable support, remains a viable alternative to continuing centuries of efforts to manage share-trading risks and the uncertainty of an unknowable future.

The impact of stock market development on economic growth in Turkey: ARDL analysis

The stock market has become more significant due to the globalization of financial markets, and there is a widespread perception that it propels economic growth. Nonetheless, some recent research has found that this effect differs throughout countries based on their financial infrastructures and degrees of development. In nations with established financial infrastructure and economic stability, the stock market aids in economic growth; nevertheless, it has no such effect in economies characterized by macroeconomic instability and uncertainty. Based on this, this study used quarterly data from 2006 to 2023 to examine the effects of Turkey's stock market development on economic growth using an autoregressive distributed lag (ARDL) method. The results show that while there was a negative and considerable short-term effect, stock market development in Turkey did not have a long-term detrimental impact on economic growth. According to the findings, for Turkey's stock market to positively impact economic growth, the country's financial system has to be modernized.

Revisiting stock market development and growth analysis in ECOWAS: a disaggregated analysis of institutional quality as mediating variable

Revisiting stock market development and growth analysis in ECOWAS: a disaggregated analysis of institutional quality as mediating variable

The Impact of Stock Market Development on Economic Growth a Case of Malaysia

The stock market is important among many financial markets. Stock Market Development is one of the enabling factors for Economic Growth. The recession crisis occurred a few times and badly affected Malaysia's Economic Growth (GDP) and Stock Market Development (SMD). Also, during the recent pandemic of COVID-19, there was a different reaction by investors and individuals overall towards the economy in Malaysia. There were inconsistent trends when the global recession in 2008 happened and COVID-19 started to spread in Malaysia for both SMD and GDP. This study aims to determine the relationship between SMD and GDP in Malaysia. Using Market Capitalization (MCAP) (as a proxy to (SMD)), Exchange Rate (EXC) and Trade Openness (TRADE) as independent variables and GDP as the dependent variable. Data from 1981 to 2020 is analyzed using Granger causality, and the ARDL method along with applying the Endogenous Growth theory. The findings of the ARDL long-run test suggested that SMD and TRADE have a positive and statistically insignificant relationship with GDP. EXC has a negative and statistically significant relationship with GDP. Granger causality test suggested a bidirectional relationship between EXC and TRADE with GDP. There is a unidirectional causality between SMD and GDP where GDP Granger causes SMD. To improve market regulation, The government should ensure the stock market is well-regulated and transparent, boost investor confidence, and increase market investment. Encouraging trade openness and exports can also help increase exchange rates and boost ringgit's demand.

Vulnerability of a developing stock market to openness: One-way return and volatility transmissions

Drawing from two independent literature sources on vulnerability and stock price volatility, we show that the high magnitude and persistence of stock return volatility evident in the Nigerian Exchange Group (NGX) are, at least in part, indications of vulnerability to openness, which paves the way for the transmission of external shocks. Using a uniquely modified set of bivariate asymmetric GARCH models, we investigate one-way return and volatility transmissions from the international Brent oil market, natural gas markets, carbon markets, and naira-dollar exchange market to the NGX. Firstly, we document direct and asymmetric return and volatility transmissions from the Brent oil market to the NGX, denoting the fragile sensitivity of the NGX to international oil price turbulence. Secondly, we find a direct volatility transmission from natural gas markets to the NGX, implying an increasing reliance on natural gas exports by the Nigerian government. Thirdly, we document an inverse volatility transmission from carbon markets to the NGX, indicating Nigeria's negative reaction, as a major oil and gas producer, to increasing global sustainable production activities. Fourthly, the insignificant effect of the naira-dollar official exchange rate on volatility in the NGX demonstrates the spurious impression that Nigeria's exertion of control over the exchange rate is shielding the economy. In sum, our results confirm that the openness of the NGX makes it vulnerable to external shock transmissions from related external markets subsisting outside Nigeria. Our results are robust to an alternative estimation procedure that employs a different measure of price volatility from the three external markets.

Stock markets, local governments leverage, and regional economic development: Evidence from China

In this paper, we examine the relationship between stock market development, the regional economic development gap, and local government behavior using two-way fixed-effects and threshold-effects models based on provincial panel data from China between 2011 and 2021. The results reveal a significant negative correlation between stock market development and the regional economic development gap, suggesting that the former promotes the coordinated development of the regional economy. And this effect is higher when the local government facing a high leverage. Considering the threshold effect of local government economic participation and the regional disparities, we find the level of local government economic participation is low, the development of the stock market widens the gap in terms of regional economic development, vice versa. Therefore, the promotion role of the stock market in the coordinated development of the regional economy requires appropriate assistance from local governments. Additionally, the threshold value in the south is significantly lower than in the north, indicating that local governments in the north should provide more guidance and assistance to the market, to foster coordinated regional economic development through the development of the stock market. Based on these findings, we recommend that China accelerates and improves the construction of multi-level stock markets to leverage the positive role of these markets in achieving coordinated regional economic development.

Stock Market Development Strategy: A Catalyst for Attaining the Sustainable Development Goal 8

Stock Market Development Strategy: A Catalyst for Attaining the Sustainable Development Goal 8

Return predictability via an long short‐term memory‐based cross‐section factor model: Evidence from Chinese stock market

AbstractThis paper proposes a cross‐section long short‐term memory (CS‐LSTM) factor model to explore the possibility of estimating expected returns in the Chinese stock market. In contrast to previous machine‐learning‐based asset pricing models that make predictions directly on equity returns, CS‐LSTM estimates are based on predictions of slope terms from Fama–MacBeth cross‐section regressions using 16 stock characteristics as factor loadings. In line with previous studies in the context of the Chinese market, we find illiquidity and short‐term momentum to be the most important factors in describing asset returns. By using 274 value‐weighted portfolios as test assets, we systematically compare the performances of CS‐LSTM and three other candidate models. Our CS‐LSTM model consistently delivers better performance than the candidate models and beats the market at all different levels of transaction costs. In addition, we observe that assets with smaller cap are favored by the model. By repeating the empirical analysis based on the top 70% of stocks, our CS‐LSTM model remains robust and consistently provides significant market‐beating performance. Our findings from the CS‐LSTM model have practical implications for the future development of the Chinese stock market and other emerging markets.

Assessing Country Risk in the Stock Market and Economic Growth Nexus: Fresh Insights from Bootstrap Panel Causality

Investigating the nexus between the stock market and the real economy is vital, as financial markets can play a critical role in economic growth. However, the country's risk factors (political, economic and financial) influence economic growth and financial markets’ nexus. This study examines the role of stock market development and country risk (political, economic and financial) on economic growth, and the moderating influence of country risk in the stock market and economic growth nexus in BRICS economies (except Russia) over the period of 2000 to 2020. The study employed various latest econometrics techniques, including Covariate Augmented Dickey-Fuller (CADF) for identifying unit root problem, Westerlund (2007) test for examining long-run relationship, Cross-sectional auto-distributive lag (CS-ARDL) for estimating long-run relationship, and finally, Konya (2006) for identifying the causal relationship among the variables. The study explored that financial risk, economic risk and political risk is negatively associated with economic growth. However, stock market does not play a significant role in economic growth in this case. The study highlighted a bi-directional causality between economic growth and stock market development. The study also suggests a unidirectional causality from political, economic and financial risk towards economic growth. Finally, the study suggests some policy recommendations based on the empirical results.

Foreign Investment and Stock Market Development in Indonesia

The Indonesian capital market is growing and is significantly influenced by domestic and international macroeconomic factors. Foreign investment is one of the worldwide factors considered to affect the growth of Indonesia's capital markets. The objective of this study is to investigate the impact of foreign investor in term of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) on the value of Indonesian stock market capitalization (MarCap). This study utilized a quantitative-descriptive research approach. Annual time series for 21 years starting from 2000 to 2020 of FDI, FPI, and MarCap data utilized. Data processing uses SPSS-25 which includes Classical Assumption Test, Multiple Linear Regression, Coefficient of Determination Test, and t-test. The findings of current study prove that both FDI and FPI have a favorable and statistically significant influence on the development of stock market capitalization in Indonesia. The study implies that the government must formulate regulation which encourages macroeconomic stability and appropriate policies to attract more foreign investors to participate in Indonesia and contribute to the development of the stock market.

Foreign securities: Issues and prospects for the Ukrainian stock market

The analysis of the current state and identification of problems of foreign investment in Ukraine are related to various factors and aspects, including the instability of the economic environment, insufficient development of the legal framework, etc. Therefore, the study aims to analyse the circulation/use of securities and identify problems and opportunities for the development of the Ukrainian stock market. To achieve this goal, various scientific methods were used, including synthesis and analysis, formal legal and other methods. It is established that due to the implemented reforms aimed at modernisation, the financial market of Ukraine is open to investors and has expanded opportunities compared to the past. It is noted that the war initiated by Russia has led to a significant increase in the investment gap between Ukraine and other countries. It is emphasised that new measures are needed that have the potential to contribute to economic recovery in the future and strengthen its resilience to possible economic shocks. To ensure the efficiency of the investment process, it is proposed to use the most appropriate and effective strategies that should be included in the provisions of the Resolution of the Cabinet of Ministers of Ukraine “On Approval of the State Strategy for Regional Development for 2021-2027”. The author proposes an integrated mechanism for attracting foreign investment, which provides for the establishment of a favourable investment climate and intensification of investment activity. Recommendations that can be used to improve legislation on attracting foreign investment in securities have been formulated and substantiated. These proposals may be useful for the practical activities of state authorities aimed at supporting foreign investment in securities in the current stock market of Ukraine

Macroeconomic Factors of Stock Market Development (The Case of Saudi Arabia)

Most economists recognize that a healthy capital market can enhance economic growth. In 2016, Saudi Arabia launched Vision 2030, and the Financial Sector Development Program is part of the Vision. The program aims to achieve economic diversification, reduce oil dependence, and trigger economic growth. Capital market development has an integral part to play in achieving Vision 2030 goals. For this reason, it is essential to investigate the factors that could influence it. The literature on the impact of macroeconomic factors on the stock market development is inconclusive; thus, it is difficult to generalize the outcome of previous studies. This research investigates the macroeconomic and institutional determinants of stock market development in Saudi Arabia from 2008 to 2021 by using a multiple linear regression approach. Following previous research, our analysis explores the impact of several factors, including Global Trade Openness, Market Depth, Macroeconomic Stability, Control of Corruption, Income level, Private capital flows, Financial intermediary development, Economic Development, Domestic Savings and investment. Among the nine evaluated factors, only four were significant. We find that the determinants of stock market development in Saudi Arabia are Economic Development, Income level, Control of corruption, and Market Depth.