Stock Market Development Research Articles

Is stock market development a spur to poverty reduction? Empirical evidence from selected sub-Saharan African countries

ABSTRACT In this study, the relationship between stock market development and poverty reduction is examined in sub-Saharan African countries during the period 1993–2019. Three proxies of stock market development were used, namely stock market capitalization, stock market traded value and stock market turnover ratio, thereby leading to three separate model specifications. A battery of panel data estimation techniques was used in the study to examine the existence of cross-sectional dependence. Furthermore, the second-generation panel unit root test and panel cointegration test were used alongside the first-generation tests to examine this linkage. Contrary to some of the previous studies, the results of the panel least squares, fully modified ordinary least squares and dynamic ordinary least squares show that stock market development has no significant impact on poverty reduction in sub-Saharan countries during the period under study. These results apply irrespective of the proxy used to measure the level of stock market development. The results were also corroborated by the heterogenous non-Granger causality test, in which a prima facie causal flow was found from poverty reduction to stock market development when stock market turnover ratio was used as a proxy. Policy implications are discussed.

Financial Development and Income Inequality: Evidence From Advanced, Emerging and Developing Economies

We investigate the effects of financial development on income inequality for a global sample of countries between 1980 and 2019. The study contributes to the current literature by first, making use of a multifaceted index of financial development that captures different aspects of financial developments over time. Second, we compare the effects of financial development on income inequality across economic classifications, namely advanced, emerging and least developed countries. Last, we investigate the non-linear effects of financial development on income inequality across these economic classifications. The findings indicate that in general, financial development reduces inequality across emerging and least developed countries, but is not statistically significant for advanced countries. However, when we disaggregate the financial development index into its sub-components (financial institutions and financial markets), we find different effects on inequality, based on the levels of development. Further investigation on the dimensions under financial institutions and financial markets (depth, access and efficiency) reveals that banking sector development under financial institutions has income inequality-reducing effects in emerging and least developed countries, while stock market development under financial markets widens inequality in least developed countries. We also find heterogeneous non-linear effects between emerging and least developed countries. The findings in our paper firstly highlight the nuances in financial development depending on the level of development in countries, and secondly that policies focused on financial inclusion of the poor can mitigate inequality.

Stock market reaction to covid-19: Evidence from Vietnam

This paper examines the impact of the Coronavirus (COVID-19) epidemic on stock market returns. In particular, COVID-19 is determined through the number of confirmed cases and the number of deaths. The research data sample was collected in Vietnam, which is an emerging country with a nascent but rapidly developing stock market during the past time. For the analytical method, the Autoregressive Distributed Lag (ARDL) method is used to estimate the research model. The estimation results indicate that the stock market reacts negatively in both the short and long term to the information about the number of COVID-19 cases. In other words, stock market returns decline when the number of COVID-19 cases increases. However, the impact of COVID-19 deaths on stock market returns is negligible. This shows that the stock market usually reacts as soon as the number of COVID-19 cases is confirmed. Regarding COVID-19 deaths, it usually takes a certain time to update the number of COVID-19 deaths since the number of COVID-19 cases is confirmed. Moreover, Vietnam has treated COVID-19 cases quite well. Therefore, stock market investors often react insignificantly to the number of COVID-19 deaths. In addition, this study also finds the negative impact of inflation and interest rates on stock market returns. The results of this study are significant empirical evidence for Vietnam, especially in COVID-19 control and stock market development.

A bibliometric analysis on financial engineering studies

Due to the availability of innovative financial products and services, financial engineering has expanded to include more practices and engineering techniques (FinTech, InsurTech, and other technologies). Financial engineering (FE) has succeeded through the stock market, financial instruments, and service developments. This study combines qualitative and quantitative approaches with bibliometric analysis to address a vacuum in financial literature. Co-citation, co-occurrence, and bibliographic coupling analysis techniques are used to make inferences about the structure of FE research in finance from January 2007 to December 2022. The study used 347 filtered research articles from the Scopus database and processed through VOS-Viewer and Biblioshiny through “R” to justify study objectives. The relevance of authors, journals, and organizations in a contemporary topic study is recognized using bibliometrics analysis. The study topic analysis revealed that modern portfolio theory acknowledges the importance of FE’s revolutionary products, such as FinTech and InsurTech, as recent advances in risk management techniques. Future research could take a multi-dimensional approach based on the current theme. New research themes emerged from the study, i.e., Financial Engineering and emerging financial markets and risk management, investment and financial crisis, FinTech, and InsurTech innovation, and Option pricing.

Theoretical principles of the formation and development of the stock market of Ukraine

The article's purpose is to consider the theoretical foundations of the formation and development of the stock market of Ukraine in modern conditions. The report provides a comprehensive study and analysis of the building and development of the stock market of Ukraine. The stock market allows for attracting capital and effectively distributing it for the development of the national economy. The development of the stock market increases the level of participation of companies in attracting additional funds for their investment programs by placing their securities on the market, and a developed stock market plays a crucial role in financing the economy compared to the banking sector. Therefore, on the stock market, enterprises with real potential can attract financial resources to implement a promising project. It was determined that the primary goal of the functioning and development of the stock market in Ukraine should be attracting financial resources to direct them into the real economy to renew production. The functioning of the market is based on specific relations between the participants of the market space, which are simultaneously part of the market and its driving force. It is shown that the stock market is the most important mechanism that ensures the effective functioning of the country's entire economy. Thus, the stock market creates conditions for a free, albeit regulated, transfer of capital to the most efficient sectors of the economy. The current state, problems, and prospects of Ukraine's stock market development are studied. The stock market of Ukraine, in terms of the scale of its development and the ratio to the total volume of financial assets, is not significant. According to the analysis results, it was established that the volume of exchange contracts with securities on trade organizers in 2018-2021 had positive dynamics. Still, according to the results of trading during January-December 2022, compared to the data of the same period in 2021, the volume of trading in financial instruments decreased by 291.36 billion hryvnias. The decrease in the book of trades in financial instruments in 2022 was influenced by the start of military operations. It has been established that the modern stock market is an effective mechanism for trading financial assets. Therefore, it needs to ensure financial and economic stability, contributing to attracting investment flows. Keywords: stock market, securities, issuers, stock exchanges, financial resources, financial investments.

Network Granger Causality Linkages in Nigeria and Developed Stock Markets: Bayesian Graphical Analysis

ABSTRACT This study investigates the interdependent structure between Nigeria and developed stock market using directed acyclic graph with Bayesian estimation techniques for the period of March 11, 2020 to July 31, 2021. The dynamic Granger causal test of both the contemporaneous and autoregressive estimation were done using the Markov Chain Monte Carlo (MCMC) simulation method with Metropolis-Hasting (MH) sampling technique. The graphical structure of the instantaneous and autoregressive results shows returns correlation for Nigeria’s stock market and both China and India’s stock market while absence of return correlation are found for both US and UK stock market. The result implies that Nigeria’s stock market has potential diversification benefit for the US and UK investors during pandemic crises. In addition, US stock market returns is found to depend on China stock market returns while volatility spill over runs from the US stock market to China’s stock market. Last, UK stock market tends to depend on India’s stock market. The implication of the study is that Nigeria’s stock market is integrated with China and India’s stock market while China’s stock market is linked to the US stock market such that any financial shock from the lead stock markets is transmitted to the lagged stock markets.

Evaluation of the effectiveness of the Bank of Russia’s measures to ensure the stability of the stock market in the face of toughening sanctions

The study identifies the key features of the development of the Russian stock market in 2021 prior to the imposition of unprecedented sanctions against the Russian Federation by Western countries. The authors point out that the blow of sanctions caused chaos in the Russian stock market, which required the Bank of Russia to immediately take measures aimed at stabilizing the situation. Using the suitable mathematical apparatus, with the help of modern tools the authors evaluate the effectiveness of those measures. Based on the analysis of the interrelations between the quotations of TTF gas, PJSC Sberbank shares, PJSC Tatneft shares, MOEX index, Brent crude oil price, and the dollar exchange rate during three time periods, a conclusion is made that the measures implemented by the regulator in order to stabilize the situation in the Russian stock market were timely and effective.

How Do Stock Market Development and Competitiveness Affect Equity Risk Premium? Implications from World Economies

Purpose: This paper examines the interrelatedness between countries’ stock market development and competitiveness and the equity risk premium (hereinafter, ERP). In addition, this paper examines the length of time that stock market development takes to have an impact of ERP. The results offer an empirical guide to stock market authorities about the robust factors that help reduce ERP, which, in turn, encourages raising equity financing. Design/methodology: The dataset includes 59 countries that are listed in the market potential index (hereinafter, MPI) covering the years 1996 to 2020. The MPI provides comprehensive macroeconomic factors that can be used for examining stock market competitiveness and, thus, its potential effects on ERP. Findings: The results of the robustness test show that (a) a negative and significant association exists between the turnover ratio of domestic shares to stocks traded and ERP, (b) the increases in stock market competitiveness are associated with increases in the number of listed companies, (c) lowly ranked countries in the MPI are associated with increasing ERP, and (d) in terms of the interaction between duration of stock market development and competitiveness, the relatively competitive stock markets take 2–6 years for stock market development indicators to have a significant effect on ERP. Originality: This paper offers two main contributions to the related literature. The first contribution is to offer a measure of stock market competitiveness using indicators of stock market development. Therefore, robust indicators of stock market development can be reached. The second contribution is to offer empirical results about the length of time (referred to in this paper as duration) required for the indicators of stock market development to have a favorable effect on ERP.

THE STUDY OF GOVERNMENT POLICY ON STOCK MARKET DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA (1984-2020)

This study explored the relationship between stock market development and Nigerian economic growth. This was done to look at Nigeria's stock market and economic growth from 1984 to 2020. The analysis relied on secondary data. The Central Bank of Nigeria statistical bulletin for 2021 presented data on stock turnover ratio, stock market capitalization ratio, total value of shares exchanged ratio, all share index, and GDP. Granger causality, Augmented Dickey Fuller Unit root test, Johansen cointegration test, and error correction model were used to analyze the data. Granger causality was shown. There is no reverse causality between stock market development metrics such as stock market capitalization ratio, turnover ratio, or total value of shares exchanged ratio and economic growth. All share index, stock market capitalization ratio, turnover ratio, and economic growth were integrated of order 1, while total value of shares traded ratio was integrated of order zero, according to unit root test results. The Johansen cointegration test showed that the All-Share Index, Stock Market Capitalization Ratio, Turnover Ratio, and Economic Growth all have four cointegrating relationships. Changes in the all-share index have a positive and significant impact on changes in economic growth, whereas changes in the stock market capitalization ratio and its lag have a negative but insignificant impact on changes in economic growth (p>0.05). Changes in the turnover ratio have a positive but insignificant impact on changes in economic growth (p>0.05), while its lag has a negative but insignificant impact on changes in economic growth (p>0.05). Changes in lagged GDP have a positive and important effect on changes in economic present-period growth (p0.01), and economic growth and the independent variables in our model have a long-run relationship as indicated by the negative and statistically significant error correction term in the model (p<0.01). Based on the results, the study recommends that the Federal Government intervene through the Asset Management Corporation of Nigeria (AMCON)/Ministry of Finance Incorporated, that more indigenous quotable companies be encouraged to pursue listing by offering incentives such as tax holidays, tax rebates, and other incentives, and that stock broking firms be encouraged to join forces, either through mergers or outright acquisition amongst other recommendations.

Moderating Effect of Financial Development on the Relationship between Renewable Energy and Carbon Emissions

This study investigates the moderating effect of financial development on the renewable energy–CO2 emissions nexus in OECD countries. We find that both composite financial development and banking sector development have an inverted U-shaped impact on CO2 emissions, while stock market development has a U-shaped impact on CO2 emissions. Further, an increase in renewable energy will reduce CO2 emissions, and this reducing impact is affected by different levels of financial development. When promoting financial development, policymakers should pay more attention to its role in enhancing renewable energy, which is related to emissions reduction.

PENGARUH PERTUMBUHAN EKONOMI, KETERBUKAAN PERDAGANGAN, DAN STABILITAS POLITIK TERHADAP PERKEMBANGAN PASAR SAHAM ASEAN-5

This study aims to analyze the effect of economic growth, trade openness, and political stability on stock market developments in ASEAN-5, which includes the Philippines, Indonesia, Malaysia, Thailand, and Vietnam during the period 2008-2020. The sampling method used purposive sampling method using the Panel Vector Error Correct Models (PVECM) analysis method. The results showed that the variable of trade openness significantly negatively affects stock market development in the short and long term. Furthermore, the political stability variable significantly positively affects short and long-term stock market development. Meanwhile, the variable economic growth does not affect stock market development. This study also finds evidence of an interrelation causal between economic growth and stock market development. At the same time, the trade openness variables have a one-way causality, while the political stability variables have no causal relationship.

Nexus between oil price and stock market development in Southeast Asian economy: Evidence from linear and nonlinear assessment

The literature has extensively investigated stock market development and its critical role. Another variety of studies focuses on determining the factors responsible for stock market development. The motivation of the study is to investigate the impact of oil price movement on stock market development in the Southeast Asian economy for the period 1990-2020.study applied several economical tools such as the second-generation panel unit root test widely known as CADF and CIPS, panel cointegration test with error correction term, panel ARDL and nonlinear ARDL. Study findings have revealed that oil price prices are negatively associated with stock market development both long-run and short-run. The nonlinear assessment established a long-run asymmetric association between oil price and stock market development. Refers to asymmetric elasticity, the study documented a negative and statistically significant linkage between asymmetric shocks of oil price and the measures of stock market development.

Nexus between oil price and stock market development in Southeast Asian economy: Evidence from linear and nonlinear assessment

Nexus between oil price and stock market development in Southeast Asian economy: Evidence from linear and nonlinear assessment

ARE THE EFFECTS OF THE MOON ON MARKET MOVEMENTS ANALOGOUS? – A STUDY ON NSE INDIA

The paper belongs to the area of Financial Astrology, an unchartered field of analysis of securities. Investors fraternity continues to find investing in the stock market an attractive and challenging venture. During the recent decade, the growth and development of the Indian stock market have been tremendous. While managing their investments in the stock market, investors most often utilize fundamental analysis and/or technical analysis. Although neither of these strategies is successful in determining when to enter into a transaction and when to exit it to maximize profits or reduce losses. The answer to this issue is financial astrology, which uses planetary positions to predict stock/index prices. In the study, the link between the NSE NIFTY and the Moons passage through Indian astrologys zodiacal signs is explored. An analysis of historical data from March 2010 to April 2020 is used in this study. In this research paper, we examine whether the moons conjunction with 12 distinct zodiac signs has significant bullish and bearish effects. Based on the studys findings, investors may be able to predict when to buy or sell stocks based on lunatic trends. Trends are determined by conjunctions that have an average positive return and those that have an average negative return. Further research is needed in term of investigating the relationship between psychology factors (heuristic bias, information ignorance, and other factors) and investment decision making by putting lunatic trends as intervening factor. The effect of moon on certain anomalies has to examine specifically. Additionally, the study adds to the body of literature on the impact of lunar factors on stock prices. KEY WORDS: Historical return, Moon, NSE NIFTY, Financial Astrology. Chi-Square test

Financial openness and financial market development

In this paper, we empirically study the linkages between financial openness and financial development using a sample of 164 countries during 1960–2020. Based on the results of the estimation of systems of equations, we find that the relationship between relative financial openness and relative banking sector development is positive and bidirectional. Likewise, the relationship between relative financial openness and relative stock market development is positive and bidirectional. However, the relationship between relative financial openness and relative bond market development is negative and bidirectional.

Political uncertainty and stock market liquidity, size, and transaction cost: The role of institutional quality

AbstractUsing panel data of 42 countries from 2001 to 2019, we examine whether political uncertainty (caused by uncertainty about national elections) explains variations in cross‐country liquidity, market size, and transaction cost. We also investigate whether institutional quality moderates the negative effects of political uncertainty on stock market development. We show that political uncertainty reduces stock market size, liquidity, and increases transaction costs. Our results indicate that institutional quality moderates the negative effects of political uncertainty on stock market development. However, we find no effects in emerging markets arising from the high prevalence of weak institutions. We confirm the robustness of our findings using alternative financial development measures and endogeneity. This study enhances our understanding of the salient role of political uncertainty in the development of the stock market, with important implications for market regulators, corporations, and investors.

A Study on the Regulation of Price Manipulation in the Chinese Stock Market

China's stock market was formally established in late 1990, and the regulation of market manipulation began in 1993. Both the formation of the stock market and the regulation of manipulation have a relatively short history, and there is great room for improvement. In the Chinese stock market, there is a general perception of the existence of main forces, which play a decisive role in the manipulation of stock market prices. Obviously, the existence of the principal phenomenon is extremely detrimental to the healthy development of the Chinese stock market. For the sake of market regulation and market development, market regulators wish to recognise the phenomenon of main force. Therefore, this paper examines market price manipulation and analyses its impact on the stock market so as to make recommendations in improving stock market regulations and restraining market price manipulation.

WORLD STOCK MARKET: CURRENT STATE AND PROSPECTS OF DEVELOPMENT OF STOCK EXCHANGE

The stock exchange is the main element of the stock market, and it is also an indicator of the efficiency of capital movement and the rapid development of the economy. It is a virtual marketplace where buyers and sellers can trade existing securities. Stocks are also called stocks or equity, most companies have shares with a turnover of more than a billion dollars. Stock exchanges play a great role in the structure of the leading stock prices, exchange courses and indexes in the country's economy. The stock market acts as a powerful and effective platform for the realization of opportunities for the mobilization of financial resources and the birth of a number of new competitive investment instruments. The main role of the stock exchange is to serve the movement of money capital, which mediates the distribution and redistribution of national income both in the national economy as a whole and between social groups, sectors and spheres of the economy. А stock trading can be considered any market where bonds are bought and sold, the prices of which are determined by offer and purchase. The activity of the stock exchange largely determines the efficiency of the stock market and the degree of influence on economic processes in the country. It is the stock exchange that ensures the concentration of demand and supply of securities, their balance at the expense of stock exchange pricing, which truly reflects the level of efficiency of the functioning of equity capital. For each financial system, the determining factor is the degree of involvement of the banking sector and the stock market in the process of financing the investment activity of enterprises. The development of the stock market increases the degree of participation of companies in the process of raising additional funds for their investment programs by placing their securities on the market, and a developed stock market also plays a key role in financing the economy compared to the banking sector. Therefore, the purpose of this article is to evaluate the process of globalization of the stock market in the world environment and analyze current state. Indicators of the stock market in the world were also considered and the main conditions of restraint to the prospects of its effective functioning were highlighted. The state and development prospects of well-known stock exchanges and further possible directions for improvement of the world stock market are analyzed.

The Effects of Oil Price Volatility on Stock Market Development in Nigeria

This study examines the effects of oil price volatility on stock market development in Nigeria from the period 1993 to 2019. Average annual oil price is used as a proxy to measure oil price in this study while Proxies for stock market development are stoc

Effect of Formal Financial Sector on Financial Deepening in Nigeria

This study examined the effect of the formal financial sector on financial deepening in Nigeria for the period 2012Q1 to 2022Q3. The specific objectives of the study were to investigate the effect of deposit money bank development on financial deepening in Nigeria; to assess the effect of the insurance industry development on financial deepening in Nigeria; to determine the effect of stock market development on financial deepening in Nigeria. The study adopted an ex-post facto research design from the quarterly time series data generated from the Central Bank of Nigeria statistical bulletin on deposit money bank development, insurance industry development, stock market development, and financial deepening. The data were analysed using the Johansen co-integration test and Fully Modified Ordinary Least Squares estimation. The findings showed that both deposit money bank development and insurance industry development have significant effects on financial deepening in Nigeria, but stock market development has an insignificant effect on financial deepening in Nigeria. It was recommended that Nigerian deposit money banks should employ strategies that will develop the industry, especially investing in technology and Artificial Intelligence (AI), such that most of its banking products and activities will be carried out seamlessly in the comfort of the customers. Furthermore, National Insurance Commission should create a regulatory framework that encourages the establishment of new insurance companies, promote transparency and accountability in the industry, and ensure that insurers have adequate capitalization. Finally, the Nigerian Exchange Group need to do more in getting companies listed.