Capital Market Linkage to Economic Growth in Nepal
This article examines the causal relationship between capital market development and economic growth in Nepal using annual time series data from 1994-2019. Total market capitalization is used as a proxy of secondary market development and the total public issue of securities in a particular year is...
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| Format: | Article |
| Language: | English |
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Westcliff University
2020-11-01
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| Series: | Westcliff International Journal of Applied Research |
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| Online Access: | https://wijar.westcliff.edu/wp-content/uploads/2020/11/Pokharel-2020.pdf |
| _version_ | 1818609849366216704 |
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| author | Jhabindra Pokharel |
| author_facet | Jhabindra Pokharel |
| author_sort | Jhabindra Pokharel |
| collection | DOAJ |
| description | This article examines the causal relationship between capital market development and economic growth in Nepal using annual time series data from 1994-2019. Total market capitalization is used as a proxy of secondary market development and the total public issue of securities in a particular year is taken as an indicator of primary market development. Using the Johansen cointegration test and vector error correction method (VECM) in regression analysis, the study reveals that capital markets in Nepal are supporting economic growth through efficient fundraising, efficient allocation of resources, fair price determination and liquidity. The findings from this study conclude that there is a unidirectional causality running from capital market development to economic growth in both the long-run and short-run. However, this study found no support for causality running from economic growth to the capital market. Therefore, the findings from this study recommend policies that increase the reach of the capital market to small and medium enterprises (SMEs) and individual investors. |
| first_indexed | 2024-12-16T15:05:04Z |
| format | Article |
| id | doaj.art-e4004ea4252c457ab7c3e0b08c0eab1e |
| institution | Directory Open Access Journal |
| issn | 2572-7176 |
| language | English |
| last_indexed | 2024-12-16T15:05:04Z |
| publishDate | 2020-11-01 |
| publisher | Westcliff University |
| record_format | Article |
| series | Westcliff International Journal of Applied Research |
| spelling | doaj.art-e4004ea4252c457ab7c3e0b08c0eab1e2022-12-21T22:27:10ZengWestcliff UniversityWestcliff International Journal of Applied Research2572-71762020-11-01414356https://doi.org/10.47670/wuwijar202041JPCapital Market Linkage to Economic Growth in NepalJhabindra Pokharel0Presidential Business School This article examines the causal relationship between capital market development and economic growth in Nepal using annual time series data from 1994-2019. Total market capitalization is used as a proxy of secondary market development and the total public issue of securities in a particular year is taken as an indicator of primary market development. Using the Johansen cointegration test and vector error correction method (VECM) in regression analysis, the study reveals that capital markets in Nepal are supporting economic growth through efficient fundraising, efficient allocation of resources, fair price determination and liquidity. The findings from this study conclude that there is a unidirectional causality running from capital market development to economic growth in both the long-run and short-run. However, this study found no support for causality running from economic growth to the capital market. Therefore, the findings from this study recommend policies that increase the reach of the capital market to small and medium enterprises (SMEs) and individual investors.https://wijar.westcliff.edu/wp-content/uploads/2020/11/Pokharel-2020.pdfcapital marketmarket capitalizationprimary marketeconomic growthnepal |
| spellingShingle | Jhabindra Pokharel Capital Market Linkage to Economic Growth in Nepal Westcliff International Journal of Applied Research capital market market capitalization primary market economic growth nepal |
| title | Capital Market Linkage to Economic Growth in Nepal |
| title_full | Capital Market Linkage to Economic Growth in Nepal |
| title_fullStr | Capital Market Linkage to Economic Growth in Nepal |
| title_full_unstemmed | Capital Market Linkage to Economic Growth in Nepal |
| title_short | Capital Market Linkage to Economic Growth in Nepal |
| title_sort | capital market linkage to economic growth in nepal |
| topic | capital market market capitalization primary market economic growth nepal |
| url | https://wijar.westcliff.edu/wp-content/uploads/2020/11/Pokharel-2020.pdf |
| work_keys_str_mv | AT jhabindrapokharel capitalmarketlinkagetoeconomicgrowthinnepal |