Open AccessThe Role of Stock Market Development in Economic Growth: Evidence from Some Euronext Countries
Author(s) -
Boubakari Ake,
Dehuan Jin
Publication year - 2010
Publication title -
international journal of financial research
Language(s) - English
Resource type - Journals
eISSN - 1923-4031
pISSN - 1923-4023
DOI - 10.5430/ijfr.v1n1p14
Subject(s) - market capitalization , stock market , economics , granger causality , causality (physics) , capitalization , stock market bubble , monetary economics , stock (firearms) , positive relationship , financial economics , econometrics , psychology , social psychology , linguistics , philosophy , physics , quantum mechanics , mechanical engineering , paleontology , horse , engineering , biology
In this article we explore causality relationship between stock market and economic growth based on the time series data compiled from 5 Euronext countries (Belgium, France, Portugal, Netherlands and United Kingdom) for the period 1995:Q1 to 2008:Q4. Granger causality test was used to find causality relationship between stock market proxies through market capitalization, total trade value, turnover ratio and economic growth (GDP and FDI). Causal relations were investigated for each country. The results of the study suggest a positive links between the stock market and economic growth for some countries for which the stock market is liquid and highly active. However, the causality relationship is rejected for the countries in which the stock market is small and less liquid