Capital Markets Integration and Economic Growth
Nowadays, the capital markets have an increasing role and weight in the modern financial systems. Economic (and financial) integration should allow companies to access more sophisticated and competitive capital markets for accelerating the economic development. The purpose of this paper is to in...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
NGO “Economic Laboratory for Transition Research” (ELIT)
2018-08-01
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| Series: | Montenegrin Journal of Economics |
| Subjects: | |
| Online Access: | http://repec.mnje.com/mje/2018/v14-n03/mje_2018_v14-n03-a12.pdf |
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| Summary: | Nowadays, the capital markets have an increasing role and weight
in the modern financial systems. Economic (and financial) integration
should allow companies to access more sophisticated and
competitive capital markets for accelerating the economic development.
The purpose of this paper is to investigate the impact of
the capital markets’ integration on economic growth in the EU countries
and identify the main factors through which capital markets’
development influences economic growth, especially in an economic
(and monetary) union. In this article we had used the Autoregressive
Distributed Lag model for the EU countries during 2004-2016.
According to the results, we can say that the integration of capital
markets has a positive impact on economic growth, and the main
factors in which the capital market positively affects economic
growth are stock market capitalization, capital mobility, value traded,
stock indices, immigrants, and, to a greater extent, small, foreign
portfolio investment. Policymakers in this area should pay
attention reducing external debt, which is a significant proportion of
foreign capital inflows, and encouraging the foreign portfolio investments
to stimulate stock market development and growth,
reducing extreme stock price volatility, fostering a good correlation
of savings with investment (i.e. capital mobility), boosting volume
growth transactions on stock markets, they should guarantee full
employment through fiscal policy, monetary policy and trade policy
as stated, by counteracting private sector or trade investment volatility,
and reducing inequality, and stimulating increased labor mobility
from developed countries to the least developed to balance
the economy. |
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| ISSN: | 1800-5845 1800-6698 |