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The Impact of Stock Market Performance upon Economic Growth

Author

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  • Najeb M.H. Masoud

    (Department of Banking and Finance, College of Economics and Business, Al-zaytoonah University of Jordan, P.O. Box 130, Amman 11733, Jordan)

Abstract

The main purpose of this study was to explore the causal link between stock market performance and economic growth in terms of a simple theoretical and empirical literature framework. Researchers hold diverse opinions regarding the importance of stock markets playing a significant role in economic growth processes by performing the following functions: improving liquidity, aggregating and mobilising capital, observing managers and exerting corporate control, providing risk-pooling and sharing services including investment levels. The growing theoretical literature argues that stock markets are crucially linked to economic growth. The findings suggest a positive relationship between efficient stock markets and economic growth, both in short run and long run and there is evidence of an indirect transmission mechanism through the effect of stock market development on investment. They are seen as providing a service that boosts economic growth. The results are consistent with the theoretical and empirical predictions.

Suggested Citation

  • Najeb M.H. Masoud, 2013. "The Impact of Stock Market Performance upon Economic Growth," International Journal of Economics and Financial Issues, Econjournals, vol. 3(4), pages 788-798.
    • Handle: RePEc:eco:journ1:2013-04-2
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Godfrey Osaseri & Ifuero Osad Osamwonyi, 2019. "Impact of Stock Market Development on Economic Growth in BRICS," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(1), pages 23-30, January.
    2. Tomader Elhassan & Bakhita Braima, 2020. "Impact of Khartoum Stock Exchange Market Performance on Economic Growth: An Autoregressive Distributed Lag ARDL Bounds Testing Model," Economies, MDPI, vol. 8(4), pages 1-16, October.
    3. Rayisa Tsyhan, 2018. "Factors of Improving the Accounting and Analytical Support System of the Enterprise Cash Flows Management: The Macroeconomic Aspect," Oblik i finansi, Institute of Accounting and Finance, issue 3, pages 83-97, September.
    4. Valentina ZOZULYA & Evgeny SOKOLOV & Evgeny KOSTYRIN & Sergey KOROLEV, 2021. "The effectiveness of applying beta-coefficient modifications when calculating returns on shares in Russian companies," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 12, pages 31-52, June.
    5. Md. Qamruzzaman & Jianguo Wei, 2018. "Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model," IJFS, MDPI, vol. 6(3), pages 1-30, August.
    6. Cingula, Domagoj & Vucetic, Sime & Gazic, Ivana, 2019. "Zagreb Stock Exchange Trends in 2017," 7th International OFEL Conference on Governance, Management and Entrepreneurship: Embracing Diversity in Organisations (Dubrovnik, 2019), in: 7th International OFEL Conference on Governance, Management and Entrepreneurship: Embracing Diversity in Organisations. April 5th - 6th, 2019, Dubrovn, pages 1-10, Governance Research and Development Centre (CIRU), Zagreb.

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    More about this item

    Keywords

    Stock Market Performance; Economic Growth; Developed and Developing Countries;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G0 - Financial Economics - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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