Capital market and economic growth nexus: Evidence from Turkey

Coşkun, Yener; Seven, Ünal; Ertuğrul, Hasan Murat; Ulussever, Talat

doi:10.1016/j.cbrev.2017.02.003

Cited by 58 publications

(52 citation statements)

References 35 publications

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“…The empirical studies focus on the links between economic growth and financial market development, rather than the derivatives market. Various research has approached economic growth via the development of financial intermediaries, such as banking sector development (Beck et al 2000;King and Levine 1993;Levine et al 2000;Levine 2005;Menyah et al 2014;Pradhan et al 2014;Chaiechi 2012), stock market development (Tsouma 2009;Ang and McKibbin 2007;Huang et al 2000), and bond market development (Coşkun et al 2017;Thumrongvit et al 2013). 1 Pradhan et al (2014) conduct an analysis on paired relations among four economic components-including the banking sector, stocks, and economic growth-and macro variables, such as foreign direct investment (FDI), trade openness, inflation rate, and government consumption and expenditure.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Theoretical and empirical research has discussed on the role of these macroeconomic variables in the link between economic growth and financial development or the capital market, which obviously includes the derivatives market. The use of macroeconomic determinants could be either separated (Kim et al 2010) or simultaneous (Coşkun et al 2017;Gries et al 2009;Menyah et al 2014;Pradhan et al 2014;Rousseau and Wachtel 2002). Kim et al (2010) discussed how trade openness influences the development of financial market whereas Menyah et al (2014) and Coşkun et al (2017) considered the interlink between financial development, trade openness, and economic growth.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The use of macroeconomic determinants could be either separated (Kim et al 2010) or simultaneous (Coşkun et al 2017;Gries et al 2009;Menyah et al 2014;Pradhan et al 2014;Rousseau and Wachtel 2002). Kim et al (2010) discussed how trade openness influences the development of financial market whereas Menyah et al (2014) and Coşkun et al (2017) considered the interlink between financial development, trade openness, and economic growth. In addition, Pradhan et al (2014) revealed that a combination between a mature financial sector and a macroeconomic policy of keeping inflation rate under control would result in a higher growth rate based on a large sample of Asian countries over more than four decades.…”

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

The Importance of the Financial Derivatives Markets to Economic Development in the World’s Four Major Economies

Vo¹,

Huynh²,

Dao³

2019

JRFM

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Over the past three decades, China and India have attained economic power close to that of Japan and the U.S. During this period, the importance of the derivatives market within the financial market has been widely recognized. However, little supporting evidence is available on its economic effects. This paper investigates the dynamic relationship between the derivatives markets and economic development in these four large economies, which we consider together as the CIJU (China, India, Japan, and the U.S.) group. We use a Granger-causality test in the framework of a vector error correction model (VECM) to examine this causal and dynamic relation with data for the period 1998Q1 to 2017Q4. Derivative markets are found to positively contribute to economic development in the short run in the U.S., Japan, and India, but the effect disappears in the long run. In China, the derivatives market has a negative effect on economic development in the short run. However, in the long run, we observe a positive effect from the derivatives market on economic development based on two long-run estimation techniques, namely, dynamic ordinary least squares and fully modified ordinary least squares. Also, the development of derivative markets causes growth volatility in India, both in the short run and long run.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

The Importance of the Financial Derivatives Markets to Economic Development in the World’s Four Major Economies

Vo¹,

Huynh²,

Dao³

2019

JRFM

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“…While many of the studies report that stock market development supports economic growth, studies with counter and weak evidences are also considerable. Coşkun et al (2017) examine the relations between the development level of capital market sub-components and ijef.ccsenet.org…”

Section: Literature Reviewmentioning

confidence: 99%

The Causality between Stock Market Development and Economic Growth: Econometric Evidence from Bangladesh

Mamun¹,

Ali²,

Hoque³

et al. 2018

IJEF

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The growth performance of Bangladesh over the last one and a half decades along with the stock market development sparks the question of whether stock market development has a significant impact on economic growth of the economy. The study investigates the time series evidence of the influence of stock market development on growth of Bangladesh economy for the period 1993-2016 employing ARDL Bounds testing approach and finds stock market development has direct impact on economic growth both in the short-run as well as in the long run together with financial depth, interest rate spread and real effective exchange rate. Granger causality tests confirm a bidirectional causal relationship between stock market development and economic growth. However, the study fails to identify a system convergent to equilibrium in regard to stock market development along with other factors that has important economic implications. Persistent improvement in financial depth and fall in interest rate spread throughout the sample period with consistent performance of real effective exchange rate except some spikes in recent years raise the demand for playing the needed role by all concerned for confirming the stability of stock market and its development in order to validate the steady state of equilibrium in the long-run.

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“…(Coskun et al, 2017). Improving cross-border capital distribution will also increase the choice for both investors and companies seeking to fund, and will lead to higher economic growth, and a promotion of diversified funding sources would reduce dependence on bank lending.…”

Section: Literature Reviewmentioning

confidence: 99%