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The Influence of Financial Market Development on Economic Growth in BRICS Countries

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  • Wait Charles

    (Department of Economics, Nelson Mandela Metropolitan University, Port Elizabeth, Republic of South Africa)

  • Ruzive Tafadzwa

    (Department of Economics, Nelson Mandela Metropolitan University, Port Elizabeth, Republic of South Africa)

  • le Roux Pierre

    (Department of Economics, Nelson Mandela Metropolitan University, Port Elizabeth, Republic of South Africa)

Abstract

The debate about the influence of financial market development on economic growth has been ongoing for more than a century. Since Schumpeter [1912] wrote about the happenings on Lombard Street there has been growing interest in the way financial market development affects economic activity and growth. As development issues have deepened, inquiry into the finance-growth nexus has also grown, with recent research focusing on various aspects of financial crisis and developments in the BRICS economies. This study investigates the influence of financial market development on the higher growth of BRICS as compared to non-BRICS counterparts. The research utilizes the Generalised Method of Moments and an extended endogenous growth model to estimate the influence of a set of financial market indicators. We find that higher private sector levels of credit and financial depth in the BRICS economies contributed to the economic growth of those economies.

Suggested Citation

  • Wait Charles & Ruzive Tafadzwa & le Roux Pierre, 2017. "The Influence of Financial Market Development on Economic Growth in BRICS Countries," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 53(1), pages 7-24, March.
    • Handle: RePEc:vrs:ijomae:v:53:y:2017:i:1:p:7-24:n:2
    DOI: 10.1515/ijme-2017-0002
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    2. Jingzhu Chen & Yuemei Ji, 2022. "Is Finance Good for Growth? New Evidence from China," CESifo Working Paper Series 9882, CESifo.
    3. Fisayo Fagbemi & John Oluwasegun Ajibike, 2022. "West African Emerging Economies: Comparative Insights on Ghana’s and Nigeria’s Stock Market Development," American Journal of Economics and Business Administration, Science Publications, vol. 14(1), pages 55-67, December.
    4. Galina Gospodarchuk & Elena Zeleneva, 2022. "Assessment of Financial Development of Countries Based on the Matrix of Financial Assets," Economies, MDPI, vol. 10(5), pages 1-18, May.
    5. Marian-Pompiliu Cristescu & Raluca-Andreea Nerișanu & Maria Flori & Florin Stoica & Florentina Laura Stoica, 2021. "Analysing the Stock Market as an Economic Lever, Using a Qualitative and a Quantitative Model," Mathematics, MDPI, vol. 9(19), pages 1-19, September.
    6. Abayomi Oredegbe, 2022. "Competition and Banking Industry Stability: How Do BRICS and G7 Compare?," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 21(1), pages 7-31, March.
    7. Amit Pandey & Ravi Kiran & Rakesh Kumar Sharma, 2023. "Investigating the Determinants of Financial Inclusion in BRICS Economies: Panel Data Analysis Using Fixed-Effect and Cross-Section Random Effect," Sustainability, MDPI, vol. 15(2), pages 1-21, January.
    8. K. Siva Kiran Guptha & R. Prabhakar Rao, 2018. "The causal relationship between financial development and economic growth: an experience with BRICS economies," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 20(2), pages 308-326, October.

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    More about this item

    Keywords

    Financial Market Development; economic growth; BRICS;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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