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Int. J. Financial Stud. 2018, 6(3), 69; https://doi.org/10.3390/ijfs6030069

Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model

School of Economics, Wuhan University of Technology, Wuhan 430070, China
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Received: 19 April 2018 / Revised: 22 July 2018 / Accepted: 24 July 2018 / Published: 2 August 2018
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Abstract

This study aims to explore the relationship between economic growth, financial innovation, and stock market development of Bangladesh for the period 1980–2016. To investigate long-run cointegration, this study used the autoregressive distributed lagged (ARDL) bounds testing approach. In addition, the Granger-causality test is used to identify directional causality between research variables under the error correction term. Study findings from the ARDL bound testing approach confirm the existence of a long-run association between financial innovation, stock market development, and economic growth. Furthermore, the findings from the Granger-causality test support bidirectional causality between financial innovation, economic growth and stock market development, and economic growth both in the long run and short run. These findings support the theory that market-based financial development and financial innovation in the financial system can spur economic development. View Full-Text
Keywords: ARDL; economic growth; financial innovation; stock market development; Granger-causality ARDL; economic growth; financial innovation; stock market development; Granger-causality
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Qamruzzaman, M.; Wei, J. Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model. Int. J. Financial Stud. 2018, 6, 69.

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