Version 1
: Received: 12 June 2018 / Approved: 12 June 2018 / Online: 12 June 2018 (14:05:09 CEST)
How to cite:
Darko, R. Stock Market development and economic growth. Should we be concerned about measurement?. Preprints2018, 2018060194. https://doi.org/10.20944/preprints201806.0194.v1
Darko, R. Stock Market development and economic growth. Should we be concerned about measurement?. Preprints 2018, 2018060194. https://doi.org/10.20944/preprints201806.0194.v1
Darko, R. Stock Market development and economic growth. Should we be concerned about measurement?. Preprints2018, 2018060194. https://doi.org/10.20944/preprints201806.0194.v1
APA Style
Darko, R. (2018). Stock Market development and economic growth. Should we be concerned about measurement?. Preprints. https://doi.org/10.20944/preprints201806.0194.v1
Chicago/Turabian Style
Darko, R. 2018 "Stock Market development and economic growth. Should we be concerned about measurement?" Preprints. https://doi.org/10.20944/preprints201806.0194.v1
Abstract
Does the choice of proxy for stock market development matter? This paper suggests that the growth effect of stock market development is sensitive to the choice of proxy and using alternative financial development indicators have practically no influence on the results. We found that using either the stock market capitalization to GDP ratio or the stock market returns; have a positive and significant effect on growth. However, we cannot make same conclusion when one uses either the ratio of total value of trades on the major stock exchanges to GDP or stock market turnover ratio to proxy for stock market development as the coefficient on these variables were found to be statistically insignificant. The indexes extracted from principal component analysis confirm the sensitivity of the effect to the choice of proxy. This finding suggest that stock market development is a conceptual terms, thus, representing it with single indicators make it impossible to identify which stock market development indicators have a significant positive growth effects.
Keywords
Economic growth, Principal Component analysis, Cointegration, Stock market development, financial market development
Subject
Business, Economics and Management, Economics
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
