Stock Market Development and Economic Growth: Empirical Evidence from Some Arab Countries

Touny, Mahmoud Abdel-Aziz

doi:10.21608/aja.2012.20110

	Stock Market Development and Economic Growth: Empirical Evidence from Some Arab Countries
المجلة العربية للإدارة
Article 19, Volume 32, Issue 1, June 2012, Page 177-197 PDF (449.29 K)
Document Type: بحوث باللغة الإنجلیزیة
DOI: 10.21608/aja.2012.20110
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Author
Mahmoud Abdel-Aziz Touny
Administrative Sciences Department, Riyadh Community College, King Saud University, Kingdom of Saudi Arabia
Abstract
This study aims to provide further empirical evidence about the relationship between stock market development and economic growth by utilizing unbalanced panel data from some Arab countries (Bahrain, Egypt, Jordan, Oman, Qatar, Saudi Arabia, Tunis, andUnited Arab Emirates) over the period (1980 – 2008). The results of both fixed and random effects models indicate that there is a positive effect of stock market development (as measured by Market Capitalization Ratio and Turnover Ratio) on economic growth. This result supports the viewpoints that stock market development can enhance economic growth, and counters the skeptic'spoint of view that the volatile nature of stock markets and speculation in developing countries may retard economic growth. On the other hand, the results support that economic growth has positive and statistically significant influence on stock market development indicators. This conclusion points out that there is a reciprocal relationship between stock market development and economic growth. The results of this study provide some policy issues in which policy makers in Arab countries should play an active role to foster the stock markets of these countries through removing the legal and regulatory impediments to Arab stock markets and realizing the international integration of these markets.
Keywords
Stock Market Development; Economic growth


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