Effect of Stock Market Development on Economic Growth

Several Studies Show the positive relationship between stock market development and economic growth. These studies confirm that stock market development can boost economic growth and emphasis on bilateral relationship between economic growth and stock market development at long term but there is only one way relationship between these tow factor, which means growth rate can create stock market development. This paper investigate the impact of stock market and banks on economic growth using a panel data set for period 1990-2007.Results suggest a positive relationship between several indicator as market capitalization ratio, total value of shares traded ratio, turnover ratio and economic growth both directly and indirectly by boosting private investment behavior.