Stock Market Development and Economic Growth: An Evidence from Saarc Countries

Dewan Muktadir-Al-Mukit; Md. Momtaz Uddin; Md. Tarikul Islam; Md. Zahir Uddin Arif

doi:10.15410/aijm/2014/v3i1/50554

Authors

Dewan Muktadir-Al-Mukit
Faculty of Business Administration, Eastern University, Road-5, Dhanmondi, Dhakaâ€“1205
Md. Momtaz Uddin
Department of Business Administration, World University of Bangladesh, Dhanmondi, Dhakaâ€“1205
Md. Tarikul Islam
School of Business, Bangladesh Open University, Gazipurâ€“1705
Md. Zahir Uddin Arif
Department of Marketing, Faculty of Business Studies, Jagannath University, Dhakaâ€“1100

DOI:

https://doi.org/10.15410/aijm/2014/v3i1/50554

Keywords:

Stock Market Development, Economic Growth, Saarc, Market Capitalization

Abstract

The stock market plays a pivotal role in the growth of an economy to a great extent. The study investigates the relationship between stock market development and economic growth in five SAARC countries: Bangladesh, India, Pakistan, Srilanka and Nepal using collected secondary data of 15 years for the period of 1996-2010. The relationship has been measured in terms of market capitalization, total value of stocks traded, stock turnover ratio and volume of the stock market determined through the total number of companies listed in the stock exchange of each country in this region. By using linear-log model, the study has found out that stock market affects economic growth significantly in SAARC countries. In addition, the result of the study by employing the stepwise regression analysis shows that the most representative indicator of capital market that is positively associated to the real economic growth of each country is market capitalization.