Stock market development and economic growth in South Africa

Chonjo, Anna Reginald (2017-03)

Thesis (MDF)--Stellenbosch University, 2017.


ENGLISH SUMMARY : The link between stock market development and economic growth in countries has been quite topical over the years from both academic and policymaking realms. The primary objective of this study is to examine the relationship between these two variables in South Africa making use of annual time series data from 1980 to 2015. The study applies the dynamic ordinary least squares approach (DOLS) which addresses endogeneity and regressor simultaneity through leads and lags of differenced endogenous explanatory variables. In addition, to test the robustness of the results the study utilises the Fully Modified Ordinary Least squares (FMOLS) and the Canonical Cointegrating Regression (CCR). The results show a positive and significant relationship between the stock market index and economic growth across all these three variants used. The study also finds that trade openness measured by exports and imports as percentage of GDP also positively affect economic growth. Overall, a policy mix aimed at improving the stock market activity is recommended as one of the ways to drive South Africa’s economic growth.

AFRIKAANSE OPSOMMING : Geen opsomming beskikbaar.

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