Interrelationship between Indian Stock Market Development and Economic Development of India for the Period:1981-2015
DOI:
https://doi.org/10.33516/rb.v42i2.86-97pKeywords:
Economic Development, Economic Growth, India, Market Capitalization, Stock Market Growth.Abstract
Through this paper an attempt has been made to investigate the relationship between stock market development and economic development in India, during the period 1981 to 2015. The Indian stock market and economy has grown substantially in the recent past. In this study, growth rate of GDP and BSE market capitalization are used as proxy for economic development and stock market development respectively in India. The study has used ADF unit root test, Granger Causality Test and Engle-Granger Test to analyze the short term and the long term relationship between them. From the results of the tests it has been established that in short term neither GDP nor Stock Market capitalization have any significant impact on each other, while in long run both are having significant impact on each other. Therefore, the government should have to frame the policy which will not only focus on the economic development, but also boost the stock market as the stock market development boosts the economic development and cannot be ignored in the long run.Downloads
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