Does the linkage between stock market performance and economic growth vary across Greater China?

Liu, Xiaohui; Sinclair, Peter

doi:10.1080/13504850500426277

Cited by 57 publications

(40 citation statements)

References 14 publications

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“…Economic growth through the changes in levels of real economic activities affects profitability and activity of firms. As a result, with changes in profitability prospects, expected earnings and dividends of shares, stock prices fluctuate (Fama, 1990;Ferson and Harvey, 1993;Cheung and Ng, 1998;Mauro, 2003;Ritter, 2005;Liu and Sinclair, 2008;Shahbaz et al, 2008).…”

Section: Introductionmentioning

confidence: 99%

Emerging Stock Market Performance and Economic Growth

Oskooe¹

2010

American Journal of Applied Sciences

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Problem statement:In spite of significant development in Iran stock market as a emerging stock market, there has been not specific research on the causality between the stock prices and economic growth. This study represented a systematic investigation of the relationship between stock market performance and economic growth in Iran by conducting causality tests within the Vector Error Correction Model (VECM) framework. Approach: To achieve this objective unit root tests are fulfilled for all time series data in their levels and their first differences. Johansen co-integration analysis is used to investigate whether the variables are co-integrated of the same order taking into account the maximum eigenvalues and trace statistics tests. A vector error correction model is applied to examine the long-run relationship between stock market performance and economic growth. Finally, Granger causality test is applied in order to find the direction of causality between the examined variables of the estimated model. Results: Findings imply the causality link between economic growth and stock price fluctuations in the long run, as well as bilateral causality running between share prices and economic growth in the short run. Conclusion: Therefore, it can be inferred that the level of real economic activity is the main factor in the movement of stock prices in the long run and stock market plays a role as a leading economic indicator of future economic growth in Iran in the short run.

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Section: Introductionmentioning

confidence: 99%

Emerging Stock Market Performance and Economic Growth

Oskooe¹

2010

American Journal of Applied Sciences

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“…Graph (5) shows the IRF of FDI to FDI declines but not hitting zero at the long run. Graph (6) shows the IRF of FDI to Cap negatively fluctuates but around zero. Graph (7) shows the IRF of CAP to RGDP declines to reach zero at the second period then positively fluctuate from the fourth period but near to zero line.…”

Section: Resultsmentioning

confidence: 99%

“…Liu & Sinclair investigate the relationship between stock market performance and economic growth in Greater China through the period 1973 to 2003 by using causality tests within the VECM framework. They found one-way causality running from economic growth to stock prices in the long run and also running from stock prices to economic growth in the short run [6]. Vazakidis & Adamopoulos investigate the causal relationship between financial development and economic growth in Greece the period 1978 to 2007 by using VECM and Granger causality tests.…”

Section: Literature Reviewmentioning

confidence: 99%

Stock Market Development and Economic Growth: Evidences from Egypt

Badr¹

2015

IJTEF

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Abstract-This study investigates the causal relationship between stock market development and economic growth in Egypt. To achieve this objective, unit root tests were conducted for time series data for the period of 2002 to 2013 in their levels and their first differences according to Dickey-Fuller. Johansen co-integration analysis was conducted to examine whether the variables are co-integrated of the same order. Vector autoregression estimates (VAR) was chosen to test the long-run relationship between stock market development and economic growth. VAR Granger Causality test was applied to determine the direction of causality between the examined variables. Finally, Variance Decomposition and Impulse response function (IRF) were used for forecasting the future relationship between the study variables. The results do not indicate a causal relationship between stock market development alone and the economic growth. However, the results show a link between stock market development as well as foreign direct investment and economic growth. Therefore, it can be inferred that government should reshape and adjust the stock market and take care of FDI to support economic growth.

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“…One can also find the contributions that found that economic growth leads to stock market development, e. g. see Dritsaki and Dritsaki-Bargiota (2005) or Liu and Sinclair (2008). Some studies find no significant influence of stock markets on growth, e. g. see Harris (1997), Fink et al (2004), Fink et al (2005), Hagmayr et al (2007), Fink et al (2009) or Caporale et al (2015).…”

Section: Literature Reviewmentioning

confidence: 98%

A Note on Relationship between Economic Activity and Stock Market Development: a Case of Euro Area Countries

Kajurová

2017

Acta Univ. Agric. Silvic. Mendelianae Brun.

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The aim of the paper is to empirically examine if the causal relationship between economic activity and stock market development exists in the selected 11 EA countries. The existence of relationship is investigated with the use of cointegration, vector error correction model and Granger causality during three sub-periods between January 1993 and January 2017. The results show that the general conclusion on the relation between activity and stock market development cannot be stated and that country-specific development should be taken into account when making decisions either from the investors' or policy makers' perspective. It also seems that the level of integration plays important role when studying the nature of relationship between variables during different time periods.

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Does the linkage between stock market performance and economic growth vary across Greater China?

Cited by 57 publications

References 14 publications

Emerging Stock Market Performance and Economic Growth

Emerging Stock Market Performance and Economic Growth

Stock Market Development and Economic Growth: Evidences from Egypt

A Note on Relationship between Economic Activity and Stock Market Development: a Case of Euro Area Countries

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