[논문]The Impact of Credit and Stock Market Development on Economic Growth in Asian Countries

NGUYEN, Bao K.Q.; HUYNH, Vy T.T.; TO, Bao C.N.

doi:10.13106/jafeb.2021.vol8.no9.0165

[국내논문] The Impact of Credit and Stock Market Development on Economic Growth in Asian Countries 원문보기

Journal of asian finance, economics and business, v.8 no.9, 2021년, pp.165 - 176

NGUYEN, Bao K.Q. (University of Economics Ho Chi Minh City) , HUYNH, Vy T.T. (University of Economics Ho Chi Minh City, National Academy of Public Administration) , TO, Bao C.N. (School of Finance, University of Economics Ho Chi Minh City)

Abstract ▼ AI-Helper

The paper has used the Solow-Swan growth model to analyze the long-term impact of credit market development and stock market development on economic growth in Asia from 2000 to 2019. The empirical model is performed with panel cointegration analysis by Common Correlated Effects (CCE) method with cross-sectional dependencies. The results find that there exists a cointegration relationship among stock market, credit market development, and economic growth. These results also show that financial structure improves the exact impact of financial development on economic growth, namely the opposite effect of stock market development and credit market development. Moreover, the Granger causality test reveals a bi-directional relationship between credit market development and economic growth, while only unidirectional causality from stock market development to economic growth for the whole group panel. And it is different for a specific country, according to Kónya's test. The view of the new structuralism does not apply in the Asian financial system when we estimate the Nonlinear Autoregressive Distributed Lag model (NARDL) to analyze the asymmetric relationship between financial structure and economic growth. On the whole, policymakers can draw on the findings to provide policy implications to improve their country's financial system as well as pursue the goal of sustainable economic growth.

주제어

표/그림 (9)

그림 Figure 1: GDP Annual Growth Rate in Asia (%) Note: The raw data was obtained from the IMF database.
표 Table 1: Descriptive Statistics
표 Table 2: Cross-Sectional Dependence Test Results of the Model
표 Table 3: Panel Unit Root Test
표 Table 4: Cointegration Analysis Results
표 Table 5: Panel Estimation Results for the Model Given by CCE
표 Table 6: The Bootstrap Panel Granger Causality Results with Cross-Sectional Dependence for all Panels
표 Table 7: The Bootstrap Panel Granger Causality Results for a Specific Country
표 Table 8: Results of Testing NARDL Model

AI 본문요약
AI-Helper

대상 데이터

The paper uses data from Asian countries from 2000 to 2019 (Table 1). To analyze the impact of the credit market and stock market development on economic growth, we excluded countries with no stock market and no completed information provided.

이론/모형

This means that any shock in one country is being transmitted to another one in Asian countries. This finding shows we should conduct the second-generation unit root tests and Westerlund panel cointegration test which add robustness between the cross-sectional dependency in the panel.

성능/효과

However, Asian countries should avoid excessive financial development and rapid development at all costs, as the financial system’s positive role in stimulating economic development will be lost.
Second, the findings also confirm a bidirectional causality between stock market development and economic growth in Kazakhstan, the Philippines, and Thailand. The empirical evidence also shows a unidirectional causality relationship from stock market development (credit market development) to economic growth and vice versa in some Asian countries.
The current situation of developing Asian countries, providing capital for the economy mainly depends on the banking system but empirical evidence finds a negative effect of the bank-based financial system on economic growth for the whole group, and it could be negative or positive for a specific country. This may be explained by the fact that these markets are not developed equally, and do not create a real competitive environment for capital.
Second, the findings also confirm a bidirectional causality between stock market development and economic growth in Kazakhstan, the Philippines, and Thailand. The empirical evidence also shows a unidirectional causality relationship from stock market development (credit market development) to economic growth and vice versa in some Asian countries. Therefore, financial development is a cause as well because of economic growth in these countries.
Table 3 lists the outcomes of the CIPS and CADF unit root test. The results show that all the variables are stationary at first difference with 1% significance level (with CIPS unit root test) and 5% significance level (with CADF unit root test). Therefore, these results of the second-generation unit root test support contention that variables under investigation are all I (1) variables.
The current situation of developing Asian countries, providing capital for the economy mainly depends on the banking system but empirical evidence finds a negative effect of the bank-based financial system on economic growth for the whole group, and it could be negative or positive for a specific country. This may be explained by the fact that these markets are not developed equally, and do not create a real competitive environment for capital. Thus, each country needs to have its own financial system development strategy.

후속연구

Specifically, some countries should only focus on financial development in depth, increasing efficiency and value, the others can do both depth development and expansion in scale. On the other hand, the research results imply that to pursue the goal of sustainable economic growth, it should reduce the gap with the developed countries in the world. However, Asian countries should avoid excessive financial development and rapid development at all costs, as the financial system’s positive role in stimulating economic development will be lost.

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