EXPLORING THE RELATIVE SIGNIFICANCE OF BANKING AND STOCK MARKET DEVELOPMENT IN PROMOTING ECONOMIC GROWTH IN DEVELOPING COUNTRIES

Authors

  • Levin H. Institute of Islamic Banking and Finance, International Islamic University Malaysia 50400 Kuala Lumpur, Malaysia

Keywords:

Banks, Stock Market, Development, Developing Countries, Panel Co-integration, Economic Growth

Abstract

This study investigates the relative contributions of banking sector and stock market development
on the economic growth of developing countries. Using panel data from 20 developing countries over the
period 1989 to 2010, the study adopts panel co-integration and Fully Modified Ordinary Least Squares
techniques to analyze the data. The results indicate that intermediated funds have a more significant
contribution to the growth process than the stock market, and banks and stock markets are substitutes rather
than compliments in financing economic activities in these countries. In addition, the study finds a strong
positive influence of financial development on economic growth. The findings highlight the importance of
deepening and strengthening the financial systems of developing countries and promoting financial
integration locally and across borders.

Published

2023-06-11

How to Cite

H., L. (2023). EXPLORING THE RELATIVE SIGNIFICANCE OF BANKING AND STOCK MARKET DEVELOPMENT IN PROMOTING ECONOMIC GROWTH IN DEVELOPING COUNTRIES. American Interdisciplinary Journal of Business and Economics (AIJBE), 10(2), 40–51. Retrieved from https://sadijournals.org/index.php/AIJBE/article/view/34

Issue

Vol. 10 No. 2 (2023): April-June, 2023

Section

Original Peer Reviewed Articles
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