The interaction between the stock market and the real economy is important in the various channels through which financial markets contribute to economic growth. This paper examines the nexus between stock market development and economic growth for tree Arab countries namely Egypt, Morocco and Tunisia. This study uses linear and nonlinear causality tests to investigate the relationship between stock market development and economic growth. The findings of the linear model show unidirectional causation between economic growth and market capitalization for Tunisia. Concerning Egypt and Morocco, there is a bidirectional causality between market capitalization and economic growth. The nonlinear causality test findings confirm the results of linear test. A significant bidirectional nonlinear causality between the two variables is detected for the three countries under investigation. This results indicates that stock market development improves economic growth in these countries. As a result, the governments of these countries should develop their stock markets by simplifying procedures and removing restrictions on the introduction of new firms to the stock exchange. Such a move might increase the size, liquidity, and activity of the stock market, so stimulating growth in the region.
| Published in | Journal of Business and Economic Development (Volume 7, Issue 1) |
| DOI | 10.11648/j.jbed.20220701.11 |
| Page(s) | 1-10 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2022. Published by Science Publishing Group |
Stock Market Development, Economic Growth, Nonlinear Causality, Arab Countries
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APA Style
Abderrazek Ben Hamouda. (2022). The Causality Between Stock Market Development and Economic Growth: Evidence from Arab Countries. Journal of Business and Economic Development, 7(1), 1-10. https://doi.org/10.11648/j.jbed.20220701.11
ACS Style
Abderrazek Ben Hamouda. The Causality Between Stock Market Development and Economic Growth: Evidence from Arab Countries. J. Bus. Econ. Dev. 2022, 7(1), 1-10. doi: 10.11648/j.jbed.20220701.11
AMA Style
Abderrazek Ben Hamouda. The Causality Between Stock Market Development and Economic Growth: Evidence from Arab Countries. J Bus Econ Dev. 2022;7(1):1-10. doi: 10.11648/j.jbed.20220701.11
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Download@article{10.11648/j.jbed.20220701.11,
author = {Abderrazek Ben Hamouda},
title = {The Causality Between Stock Market Development and Economic Growth: Evidence from Arab Countries},
journal = {Journal of Business and Economic Development},
volume = {7},
number = {1},
pages = {1-10},
doi = {10.11648/j.jbed.20220701.11},
url = {https://doi.org/10.11648/j.jbed.20220701.11},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20220701.11},
abstract = {The interaction between the stock market and the real economy is important in the various channels through which financial markets contribute to economic growth. This paper examines the nexus between stock market development and economic growth for tree Arab countries namely Egypt, Morocco and Tunisia. This study uses linear and nonlinear causality tests to investigate the relationship between stock market development and economic growth. The findings of the linear model show unidirectional causation between economic growth and market capitalization for Tunisia. Concerning Egypt and Morocco, there is a bidirectional causality between market capitalization and economic growth. The nonlinear causality test findings confirm the results of linear test. A significant bidirectional nonlinear causality between the two variables is detected for the three countries under investigation. This results indicates that stock market development improves economic growth in these countries. As a result, the governments of these countries should develop their stock markets by simplifying procedures and removing restrictions on the introduction of new firms to the stock exchange. Such a move might increase the size, liquidity, and activity of the stock market, so stimulating growth in the region.},
year = {2022}
}
TY - JOUR T1 - The Causality Between Stock Market Development and Economic Growth: Evidence from Arab Countries AU - Abderrazek Ben Hamouda Y1 - 2022/01/12 PY - 2022 N1 - https://doi.org/10.11648/j.jbed.20220701.11 DO - 10.11648/j.jbed.20220701.11 T2 - Journal of Business and Economic Development JF - Journal of Business and Economic Development JO - Journal of Business and Economic Development SP - 1 EP - 10 PB - Science Publishing Group SN - 2637-3874 UR - https://doi.org/10.11648/j.jbed.20220701.11 AB - The interaction between the stock market and the real economy is important in the various channels through which financial markets contribute to economic growth. This paper examines the nexus between stock market development and economic growth for tree Arab countries namely Egypt, Morocco and Tunisia. This study uses linear and nonlinear causality tests to investigate the relationship between stock market development and economic growth. The findings of the linear model show unidirectional causation between economic growth and market capitalization for Tunisia. Concerning Egypt and Morocco, there is a bidirectional causality between market capitalization and economic growth. The nonlinear causality test findings confirm the results of linear test. A significant bidirectional nonlinear causality between the two variables is detected for the three countries under investigation. This results indicates that stock market development improves economic growth in these countries. As a result, the governments of these countries should develop their stock markets by simplifying procedures and removing restrictions on the introduction of new firms to the stock exchange. Such a move might increase the size, liquidity, and activity of the stock market, so stimulating growth in the region. VL - 7 IS - 1 ER -
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