Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model
This study aims to explore the relationship between economic growth, financial innovation, and stock market development of Bangladesh for the period 1980–2016. To investigate long-run cointegration, this study used the autoregressive distributed lagged (ARDL) bounds testing approach. In ad...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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MDPI AG
2018-08-01
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| Series: | International Journal of Financial Studies |
| Subjects: | |
| Online Access: | http://www.mdpi.com/2227-7072/6/3/69 |
| _version_ | 1828417039966928896 |
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| author | Md. Qamruzzaman Jianguo Wei |
| author_facet | Md. Qamruzzaman Jianguo Wei |
| author_sort | Md. Qamruzzaman |
| collection | DOAJ |
| description | This study aims to explore the relationship between economic growth, financial innovation, and stock market development of Bangladesh for the period 1980–2016. To investigate long-run cointegration, this study used the autoregressive distributed lagged (ARDL) bounds testing approach. In addition, the Granger-causality test is used to identify directional causality between research variables under the error correction term. Study findings from the ARDL bound testing approach confirm the existence of a long-run association between financial innovation, stock market development, and economic growth. Furthermore, the findings from the Granger-causality test support bidirectional causality between financial innovation, economic growth and stock market development, and economic growth both in the long run and short run. These findings support the theory that market-based financial development and financial innovation in the financial system can spur economic development. |
| first_indexed | 2024-12-10T14:13:30Z |
| format | Article |
| id | doaj.art-93c8f3fa34da4c26947088dd257f34cc |
| institution | Directory Open Access Journal |
| issn | 2227-7072 |
| language | English |
| last_indexed | 2024-12-10T14:13:30Z |
| publishDate | 2018-08-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | International Journal of Financial Studies |
| spelling | doaj.art-93c8f3fa34da4c26947088dd257f34cc2022-12-22T01:45:25ZengMDPI AGInternational Journal of Financial Studies2227-70722018-08-01636910.3390/ijfs6030069ijfs6030069Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL ModelMd. Qamruzzaman0Jianguo Wei1School of Economics, Wuhan University of Technology, Wuhan 430070, ChinaSchool of Economics, Wuhan University of Technology, Wuhan 430070, ChinaThis study aims to explore the relationship between economic growth, financial innovation, and stock market development of Bangladesh for the period 1980–2016. To investigate long-run cointegration, this study used the autoregressive distributed lagged (ARDL) bounds testing approach. In addition, the Granger-causality test is used to identify directional causality between research variables under the error correction term. Study findings from the ARDL bound testing approach confirm the existence of a long-run association between financial innovation, stock market development, and economic growth. Furthermore, the findings from the Granger-causality test support bidirectional causality between financial innovation, economic growth and stock market development, and economic growth both in the long run and short run. These findings support the theory that market-based financial development and financial innovation in the financial system can spur economic development.http://www.mdpi.com/2227-7072/6/3/69ARDLeconomic growthfinancial innovationstock market developmentGranger-causality |
| spellingShingle | Md. Qamruzzaman Jianguo Wei Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model International Journal of Financial Studies ARDL economic growth financial innovation stock market development Granger-causality |
| title | Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model |
| title_full | Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model |
| title_fullStr | Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model |
| title_full_unstemmed | Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model |
| title_short | Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model |
| title_sort | financial innovation stock market development and economic growth an application of ardl model |
| topic | ARDL economic growth financial innovation stock market development Granger-causality |
| url | http://www.mdpi.com/2227-7072/6/3/69 |
| work_keys_str_mv | AT mdqamruzzaman financialinnovationstockmarketdevelopmentandeconomicgrowthanapplicationofardlmodel AT jianguowei financialinnovationstockmarketdevelopmentandeconomicgrowthanapplicationofardlmodel |