Stock market development and economic growth in Tanzania: an ARDL and bound testing approach
Purpose – The purpose of this paper is to contribute to empirical evidence by recognizing the importance of stock markets in the financial system and consequently its causality to economic growth and vice versa. Design/methodology/approach – The study used the autoregressive distribute lag model (AR...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2020-08-01
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| Series: | Review of Economics and Political Science |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/REPS-11-2019-0150/full/pdf?title=stock-market-development-and-economic-growth-in-tanzania-an-ardl-and-bound-testing-approach |
| _version_ | 1798020512659537920 |
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| author | Saganga Mussa Kapaya |
| author_facet | Saganga Mussa Kapaya |
| author_sort | Saganga Mussa Kapaya |
| collection | DOAJ |
| description | Purpose – The purpose of this paper is to contribute to empirical evidence by recognizing the importance of stock markets in the financial system and consequently its causality to economic growth and vice versa. Design/methodology/approach – The study used the autoregressive distribute lag model (ARDL) with bound testing procedures, the sample covered quarterly time-series data from 2001q1 to 2019q2 in Tanzania. Findings – The results suggest that stock market development have both negative and positive causality for both short-run dynamics and long-run relationship with economic growth. Economic growth is found to only cause and relate negatively to liquidity both in the short-run and in the long-run. The results show predominantly a unidirectional causality flow from stock market development to economic growth and finds partial causality flow from economic growth to stock market development, as represented by stock market turnover which proxied liquidity. Originality/value – The use of quarterly data to reflect more realistically the dynamics of the variables because yearly data may sometimes cover-up specific dynamics that may be useful for prediction and policy planning. The study uses indices to capture general aspects within the stock market against economic growth as an intuitive way to aggregate the stock market development effects. |
| first_indexed | 2024-04-11T16:58:49Z |
| format | Article |
| id | doaj.art-31b56a5fe5e244cfb647056136b2c7cc |
| institution | Directory Open Access Journal |
| issn | 2631-3561 |
| language | English |
| last_indexed | 2024-04-11T16:58:49Z |
| publishDate | 2020-08-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | Review of Economics and Political Science |
| spelling | doaj.art-31b56a5fe5e244cfb647056136b2c7cc2022-12-22T04:13:11ZengEmerald PublishingReview of Economics and Political Science2631-35612020-08-015318720610.1108/REPS-11-2019-0150646406Stock market development and economic growth in Tanzania: an ARDL and bound testing approachSaganga Mussa Kapaya0Department of Accounting and Finance, Faculty of Business Management, Open University of Tanzania, Dar es Salaam, United Republic of TanzaniaPurpose – The purpose of this paper is to contribute to empirical evidence by recognizing the importance of stock markets in the financial system and consequently its causality to economic growth and vice versa. Design/methodology/approach – The study used the autoregressive distribute lag model (ARDL) with bound testing procedures, the sample covered quarterly time-series data from 2001q1 to 2019q2 in Tanzania. Findings – The results suggest that stock market development have both negative and positive causality for both short-run dynamics and long-run relationship with economic growth. Economic growth is found to only cause and relate negatively to liquidity both in the short-run and in the long-run. The results show predominantly a unidirectional causality flow from stock market development to economic growth and finds partial causality flow from economic growth to stock market development, as represented by stock market turnover which proxied liquidity. Originality/value – The use of quarterly data to reflect more realistically the dynamics of the variables because yearly data may sometimes cover-up specific dynamics that may be useful for prediction and policy planning. The study uses indices to capture general aspects within the stock market against economic growth as an intuitive way to aggregate the stock market development effects.https://www.emerald.com/insight/content/doi/10.1108/REPS-11-2019-0150/full/pdf?title=stock-market-development-and-economic-growth-in-tanzania-an-ardl-and-bound-testing-approachardl modelstock market developmenteconomic growthtanzania |
| spellingShingle | Saganga Mussa Kapaya Stock market development and economic growth in Tanzania: an ARDL and bound testing approach Review of Economics and Political Science ardl model stock market development economic growth tanzania |
| title | Stock market development and economic growth in Tanzania: an ARDL and bound testing approach |
| title_full | Stock market development and economic growth in Tanzania: an ARDL and bound testing approach |
| title_fullStr | Stock market development and economic growth in Tanzania: an ARDL and bound testing approach |
| title_full_unstemmed | Stock market development and economic growth in Tanzania: an ARDL and bound testing approach |
| title_short | Stock market development and economic growth in Tanzania: an ARDL and bound testing approach |
| title_sort | stock market development and economic growth in tanzania an ardl and bound testing approach |
| topic | ardl model stock market development economic growth tanzania |
| url | https://www.emerald.com/insight/content/doi/10.1108/REPS-11-2019-0150/full/pdf?title=stock-market-development-and-economic-growth-in-tanzania-an-ardl-and-bound-testing-approach |
| work_keys_str_mv | AT sagangamussakapaya stockmarketdevelopmentandeconomicgrowthintanzaniaanardlandboundtestingapproach |