The Impact of the Local Financial Market on Economic Growth: A Case Study of Kazakhstan

Abstract

Kazakhstan’s financial market has always been the focus of the government attention as an important element of country development. Therefore, the main goal is to build a well-developed, competitive and trustworthy financial market that has a dominant influence on the economy and sustainable development. Nevertheless, this statement is true for economies that have reached a certain level of development. For countries with economies in transition, achievement of a significant level of economic growth is a prerequisite for the formation of a stable capital market and banking system, that will subsequently have a significant positive impact on economic growth. This study investigates the relationship between the local financial market and economic growth for Kazakhstan based on measures of economic growth and its components, as well as empirical indicators of banking development and stock market — size, liquidity and volatility — used as control variables that determine Kazakhstan’s economy. Time series regression analysis and Granger causality test was performed for data from 1994 to 2017 in order to design country-specific measures for financial development. The results confirmed the profile of Kazakhstan’s economy by showing that world oil prices and total investment are the most powerful factors influencing economic growth. The direction of causation for Kazakhstan comes from economic growth towards the development of the local financial market, contrary to the postulate that the development of a financial intermediary stimulates economic growth. Therefore, at this stage, the financial sector does not stimulate the economic development of Kazakhstan, but rather the economic growth based on oil production and export is a catalyst for the development of the financial sector. It should be recommended to Kazakhstan’s government to shift the focus from financial market to economic development in order to mobilise sufficient volumes of domestic and international investments to transform the economy and make a transition to sustainable growth.

Relevancia Económica del Crédito Interno, Ahorro Interno y Capitalización Bursátil en la Economía Peruana

“…Estos resultados están en concordancia con la teoría de crecimiento de Solow, quien justifica un crecimiento más alto porque dichas economías se encuentran más lejos de su estado estacionario. Adicionalmente, Nichkasova et al (2022) demostraron para el caso de Kazakhstan, país ubicado en el continente asiático con una población que supera los 18 millones de habitantes, que la relación de causalidad proviene del crecimiento económico hacia el desarrollo del mercado financiero, concluyeron que son los precios internacionales del petróleo y la inversión total los factores más importantes que influyen en el crecimiento económico. Realizaron un análisis de regresión y una prueba de causalidad de Granger para el periodo 1994 al 2017.…”