Publication:
Stock market development and macroeconomic performance in Thailand
Abstract
Rapid development of financial markets particularly stock markets has been a main feature of many emerging markets. The conventionally held view, which has a basis in the seminal work of Schumpeter (1911), is that the stock market development is beneficial to the economy since it provides liquidity and an avenue for risk sharing and diversification, allows efficient allocation of resources to productive investment, reduces information and transaction costs and, consequently allows firms to undertake profitable investments. This view has been supported by various early empirical studies noting a positive relation between stock market development and economic growth. It has also been supported by recent studies utilizing advanced time series econometrics and finding the causal influences of stock market development on economic performance. Still, against this view and empirical evidence, some have also noted potential detrimental effects of stock market development through saving reduction, facilitation of counterproductive corporate takeovers, attraction of speculative inflows and reversal of financial capitals.
Keywords
Stock market development , Economic growth , VAR , Superexogeneity , Thailand
Citation
Ibrahim, M. H. (2011). Stock market development and macroeconomic performance in Thailand. Inzinerine Ekonomika-Engineering Economics, 22 (3), pp. 230-240.
Publisher
Kaunas University of Technology