Impact of financial development on economic growth: Empirical analysis of India

Gakhar, Divya Verma; Kundlia, Shweta

doi:10.5958/0973-9343.2018.00018.2

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“…Several studies have investigated the reverse relationship that is, the impact of the financial market on economic development, and some studies have found positive influence of financial development on economic growth (Springler, 2005‐2006; Twerefou et al ., 2019; Uddin et al ., 2013; Lazarov et al ., 2016; Najeb and Glenn, 2012; Nyasha and Odhiambo, 2017 and 2020), while others found negative and/or insignificant impact of financial development on economic growth (Pan and Mishra, 2018; Jun et al ., 2015). Still other studies have shown a bi‐directional causality between financial development and economic growth (Al‐Malkawi et al ., 2012; Hondroyiannis et al ., 2004; Marques et al ., 2019; Gakhar and Kundlia, 2018) suggesting that financial markets promote growth, and that growth in turn induces the development of financial markets (Greenwood and Smith, 1997). Some studies produced confusing arguments proposing the stock market as a determinant of economic growth but testing the reverse effect that is, impact of economic growth on SMD in their studies (Bayar, 2016; Tsaurai, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

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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Section: Literature Reviewmentioning

confidence: 99%

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

Saliya

2020

Int. J Fin Econ

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Impact of financial development on economic growth: Empirical analysis of India

Cited by 1 publication

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

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

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