Stock Market and Economic Growth in China

Abstract

This study investigates the impact of stock market development on economic growth in China. To this end, the quarterly data from 1996 to 2011 are used and the empirical investigation is conducted within the unit root and the cointegration framework. The results show that the relationship between the stock market development, proxied by the total market capitalization, and economic growth is negative. This result is consistent with Harris'(1997) finding that the stock market development generally does not contribute positively to economic growth in developing countries if the stock market is mainly an administratively-driven market.

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