|
|||||
|
|
Endogenous Growth Models and Stock Market Development: Evidence from Four Countries |
|
| Authors: | Guglielmo Maria Caporale Peter Howells Alaa M Soliman |
| Institution: | London South Bank University and London Metropolitan University, 103 Borough Road, London SE1 0AA, UK. Tel: +44(0)2078157012;Fax: +44(0)2078158226;E-mail: .; HLSS, University of the West of England, Coldharbour Lane, Bristol, BS16 1QY, UK. Tel: +44(0)1173283684;E-mail: .; Leeds Metropolitan University, Leeds 6 3QS, UK. Tel: +44(0)1132837452;E-mail: . |
| Abstract: | This paper re‐examines the relationship between stock market development and economic growth. It provides a theoretical basis for establishing the channel through which stock markets affect economic growth in the long run. It examines the hypothesis of endogenous growth models that financial development causes higher growth through its influence on the level of investment and its productivity. The empirical part of this study exploits techniques recently developed to test for causality in VARs. The evidence obtained from a sample of four countries suggests that investment productivity is the channel through which stock market development enhances the growth rate in the long run. |
| Keywords: | |