sajm






Does Type of Financial Markets Matter for Achieving Economic Growth? An Evidence from OECD Countries

Tamal Nath1, Rudra P Pradhan2, Mohd Tabrej Alam3, Bhuyashi Talukdar4, Shifa Shahin5 and Satyajit Mallik6

DOI: https://10.62206/sajm.31.4.2024.84-109

PUBLISHED :13 FEB 2025

Abstract

We scrutinized the interrelationships between economic growth and the development of financial markets in 36 OECD countries over the period from 1961 to 2022. The investigation was done by using 13 different financial indicators, grouped under banking system, stock markets, and bond markets development. The banking system covers five indicators, while the stock and bond markets cover four indicators each. Using appropriate time-series modeling, we observe both bidirectional and unidirectional Granger causality between economic growth and financial development indicators. Interestingly, the Granger causality results vary, depending upon the particular financial market indicator(s) that we choose to deploy in this nexus. In sum, all these financial markets’ indicators are sizeably interrelated with economic growth. This suggests that a robust financial structure, together with well-functioning financial markets and institutions, principally relating to banking, stock and bond markets development, is highly needed in the economy.

Key Words

Economic growth, Financial structure, Financial markets, Granger causality, OECD countries

Author Biography

Tamal Nath1
Senior Research Scholar, Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur- 721302, India. E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Rudra P Pradhan2
Professor, Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur-721302, India. E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Mohd Tabrej Alam3
Senior Research Scholar, Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur- 721302, India. E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Bhuyashi Talukdar4
Junior Research Scholar, Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur- 721302, India. E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Shifa Shahin5
Senior Research Scholar, Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur- 721302, India. E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Satyajit Mallik6
Junior Research Scholar, Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur- 721302, India. E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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