Preliminary communication
https://doi.org/10.18045/zbefri.2020.2.619
The interdependence between stock market development and economic growth: a multi-country examination
Hana Bawazir
orcid.org/0000-0002-7158-3771
; University of Bahrain, College of Business Administration, Kingdom of Bahrain.
Mukesh Kumar
orcid.org/0000-0001-8404-1747
; University of Bahrain, College of Business Administration, Kingdom of Bahrain
Saban Celik
; İzmir Katip Çelebi University, Faculty of Economics and Administrative Sciences, Turkey
Khadija Abdulredha Abdulla
Bora Aktan
orcid.org/0000-0002-1334-3542
; University of Bahrain, College of Business Administration, Kingdom of Bahrain.
Abstract
This paper attempts to test the relationship between economic growth and equity market development in GCC region which is the Cooperation Council for the Arab States of the Gulf, namely, Saudi Arabia, Bahrain, the United Arab Emirates, Oman, Kuwait and Qatar over the period of 2000 and 2017. The Generalized Linear Mixed Model (GLMM) is adopted to find the nexus and the nature of the relationship. Compared to the conventional regression models, GLMM provides a more reliable conclusion accounting for the missing data and eliminate the country specific differences. The study finds a significant positive association between stock market liquidity (SML) and per capita real gross domestic product (GDP) but insignificant negative association between stock market capitalization (SMC) and GDP in the long run. The results also indicate that SML and SMC are significantly and positively correlated. Considering well-performing stock markets can enhance the nation’s wealth, reduce the over-dependence on oil as a major contributor to the economic growth, the results suggest that policy makers in the region ought to play more active role to stimulate their equity markets together with global integration.
Keywords
stock market development; economic growth; financial market; causality
Hrčak ID:
249264
URI
Publication date:
30.12.2020.
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