Stock market, real estate market, and economic growth: an ARDL approach
-
Author(s)My-Linh Thi NguyenLink to ORCID Index: https://orcid.org/0000-0001-7475-2502
,
Toan Ngoc BuiLink to ORCID Index: https://orcid.org/0000-0002-0595-3172
-
DOIhttp://dx.doi.org/10.21511/imfi.16(4).2019.25
-
Article InfoVolume 16 2019, Issue #4, pp. 290-302
- Cited by
- 1348 Views
-
254 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The paper investigates the correlation between stock market, real estate market, and economic growth in Vietnam, which is an emerging country. Quarterly data in Vietnam from the third quarter of 2004 to the third quarter of 2018 were utilized. By using the Autoregressive Distributed Lag (ARDL) approach, the results reveal that economic growth is positively associated with stock market and real estate market. An unprecedented finding of this study is that economic growth (GDP) is more correlated to stock market efficiency (SME) than net trading value by foreign investors (FI). Moreover, global financial crisis (GFC) exerts a negative impact on economic growth and real estate market in Vietnam. Further, net trading value by foreign investors (FI) also negatively influences real estate market (REM) in the short term. The study has greatly succeeded in giving first empirical evidence on the relationship between stock market, real estate market, and economic growth in Vietnam. More than that, the results show the key role of global financial crisis in this correlation. The findings are valuable to economies around the world, especially bringing a practical and meaningful value to developing countries like Vietnam.
- Keywords
-
JEL Classification (Paper profile tab)E21, G01, O16
-
References49
-
Tables5
-
Figures6
-
- Figure 1. The correlation between stock market, real estate market, and economic growth
- Figure 2. Stability tests
- Figure 3. Stock market (SME, FI) and economic growth (GDP)
- Figure 4. Real estate market (REM) and economic growth (GDP)
- Figure 5. Real estate market (REM) and net trading value by foreign investors (FI)
- Figure 6. Real estate market (REM), economic growth (GDP), and global financial crisis (GFC)
-
- Table 1. Descriptive statistics of all variables
- Table 2. Correlation matrix
- Table 3. Unit root test (Dickey-Fuller test)
- Table 4. ARDL bound testing cointegration
- Table 5. Coefficient estimation results
-
- Ake, B. (2010). The role of stock market development in economic growth: evidence from some Euronext countries. International Journal of Financial Research, 1(1), 14-20.
- Ali, G., & Zaman, K. (2017). Do house prices influence stock prices? Empirical investigation from the panel of selected European Union countries. Economic Research-Ekonomska Istraživanja, 30(1), 1840-1849.
- Arestis, P., Demetriades, P. O., & Luintel, K. B. (2001). Financial development and economic growth: the role of stock markets. Journal of Money, Credit and Banking, 33(1), 16-41.
- Bahmani-Oskooee, M., & Ghodsi, S. (2018). Asymmetric causality between the U.S. housing market and its stock market: Evidence from state level data. The Journal of Economic Asymmetries, 18, 1-8.
- Bolanos, E. R. L., Burneo, K., Galindo, H., & Berggrun, L. (2015). Emerging markets integration in Latin America (MILA) stock market indicators: Chile, Colombia, and Peru. Journal of Economics, Finance and Administrative Science, 20, 74-83.
- Bouchouicha, R., & Ftiti, Z. (2012). Real estate markets and the macroeconomy: A dynamic coherence framework. Economic Modelling, 29(5), 1820-1829.
- Carp, L. (2012). Can stock market development boost economic growth? Empirical evidence from emerging markets in Central and Eastern Europe. Procedia Economics and Finance, 3(2012), 438-444.
- Cayon, E., Thorp, S., & Wu, E. (2017). Immunity and infection: Emerging and developed market sovereign spreads over the global financial crisis. Emerging Markets Review, 34, 162-174.
- Cerra, V., & Saxena, S. C. (2008). Growth dynamics: The myth of economic recovery. American Economic Review, 98(1), 439-457.
- Choi, C., & Park, K. (2017). Financial system and housing price. Emerging Markets Finance and Trade, 54(2), 328-335.
- Crowe, C., Dell’Ariccia, G., Igan, D., & Rabanal, P. (2013). How to deal with real estate booms: Lessons from country experiences. Journal of Financial Stability, 9(3), 300-319.
- Dickey, D., & Fuller, W. (1979). Distribution of the Estimators for Autoregressive Time Series with Unit Root. Journal of the American Statistical Association, 74, 427-432.
- Durham, J. B. (2004). Absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth. European Economic Review, 48(2), 285-306.
- Enisan, A. A., & Olufisayo, A. O. (2009). Stock market development and economic growth: Evidence from seven subSaharan African countries. Journal of Economics & Business, 61(2), 162-171.
- Fufa, T., & Kim, J. (2018). Stock markets, banks, and economic growth: Evidence from more homogeneous panels. Research in International Business and Finance, 44, 504-517.
- Goldsmith, R. W. (1969). Financial Structure and Development. New Haven: Yale University Press.
- Heaney, R., & Sriananthakumar, S. (2012). Time-varying correlation between stock market returns and real estate returns. Journal of Empirical Finance, 19, 583-594.
- Hui, E., & Chan, K. (2014). The global financial crisis: Is there any contagion between real estate and equity markets? Statistical Mechanics and its Applications, 405, 216-225.
- Hui, E., Zuo, W., & Hu, L. (2011). Examining the relationship between real estate and stock markets in Hong Kong and the United Kingdom through datamining. International Journal of Strategic Property Management, 15(1), 26-34.
- Ibrahim, M. H. (2010). House price-stock price relations in Thailand: an empirical analysis. International Journal of Housing Markets and Analysis, 3(1), 69-82.
- Ibrahim, M. H., & Law, S. H. (2014). House prices and bank credits in Malaysia: An aggregate and disaggregate analysis. Habitat International, 42, 111-120.
- Igan, D., Kabundi, A., Simone, F. N. D., Pinheiro, M., & Tamirisa, N. (2011). Housing, credit, and real activity cycles: Characteristics and comovement. Journal of Housing Economics, 20(3), 210-231.
- Kapan, T., & Minoiu, C. (2018). Balance Sheet Strength and Bank Lending: Evidence from the Global Financial Crisis. Journal of Banking and Finance, 92, 35-50.
- Kroszner, R. S., Laeven, L., & Klingebiel, D. (2007). Banking crises, financial dependence, and growth. Journal of Financial Economics, 84(1), 187-228.
- Lean, H. H., & Smyth, R. (2014). Dynamic interaction between house prices and stock prices in Malaysia. International Journal of Strategic Property Management, 18(2), 163-177.
- Levine, R., & Zervos, S. (1998). Stock markets, banks, and economic growth. American economic review, 88(3), 537-558.
- Li, X., Chang, T., Miller, S., Balcilar, M., & Gupta, R. (2015). The Co-Movement and Causality between the U.S. Housing and Stock Markets in the Time and Frequency Domains. International Review of Economics & Finance, 38, 220-233.
- Liang, Q., & Cao, H. (2007). Property prices and bank lending in China. Journal of Asian Economics, 18(1), 63-75.
- Liang, Q., & Teng, J. Z. (2006). Financial development and economic growth: Evidence from China. China Economic Review, 17(4), 395-411.
- Lim, T. (2018). Growth, financial development, and housing booms. Economic Modelling, 69, 91-102.
- Liu, Y., & Su, C. (2010). The relationship between the real estate and stock markets of China: Evidence from a nonlinear model. Applied Financial Economics, 20(22), 1741-1749.
- Marques, L. M., Fuinhas, J. A., & Marques, A. C. (2013). Does the stock market cause economic growth? Portuguese evidence of economic regime change. Economic Modelling, 32, 316-324.
- Miller, N., Peng, L., & Sklarz, M. (2011). House prices and economic growth. Journal of Real Estate Finance and Economics, 42(4), 522-541.
- Mishra, P. K., Das, K. B., & Pradhan, B. B. (2010). Foreign institutional investments and real economic growth in India: A causality test. International Research Journal of Finance and Economics, 41, 210-219.
- Ngare, E., Nyamongo, E. M., & Misati, R. N. (2014). Stock market development and economic growth in Africa. Journal of Economics and Business, 74, 24-39.
- Nneji, O., Brooks, C., & Ward, C. (2013). House price dynamics and their reaction to macroeconomic changes. Economic Modelling, 32, 172-178.
- Nyakabawo, W., Miller, S., Balcilar, M., Das, S., & Gupta, R. (2015). Temporal causality between house prices and output in the US: A bootstrap rolling-window approach. North American Journal of Economics and Finance, 33, 55-73.
- Pan, L., & Mishra, V. (2017). Stock market development and economic growth: Empirical evidence from China. Economic Modelling, 68, 661-673.
- Pesaran, M. H., Shin, Y., & Smith, R. (2001). Bounds testing approaches to the analysis of level relationship. Journal of Applied Econometrics, 16(3), 289-326.
- Schmalz, M. C., Sraer, D. A., & Thesmar, D. (2016). Housing collateral and entrepreneurship. Journal of Finance, 72(1), 99-132.
- Shahbaz, M., Ahmed, M., & Ali, L. (2008). Stock market development and economic growth: ARDL causality in Pakistan. International Research Journal of Finance and Economics, 14, 182-195.
- Su, C. (2011). Non-linear causality between the stock and real estate markets of Western European countries: Evidence from rank tests. Economic Modelling, 28, 845-851.
- Su, C., Chang, H., & Zhu, M. (2011). A non-linear model of causality between the stock and real estate markets of European countries. Romanian Journal of Economic Forecasting, 1, 41-53.
- Tsai, I. (2015). Dynamic information transfer in the United States housing and stock markets. North American Journal of Economics and Finance, 34, 215-230.
- Tupenaite, L., Kanapeckiene, L., & Naimaviciene, J. (2017). Determinants of Housing Market Fluctuations: Case Study of Lithuania. Procedia Engineering, 172, 1169-1175.
- Tursoy, T., & Faisal, F. (2016). Causality between stock price and GDP in Turkey: An ARDL bounds testing approach. Romanian Statistical Review, 4(2016), 3-19.
- Yuksel, A. (2016). The relationship between stock and real estate prices in Turkey: Evidence around the global financial crisis. Central Bank Review, 16, 33-40.
- Zhang, H., Li, L., Hui, E., & Li, V. (2016). Comparisons of the relations between housing prices and the macroeconomy in China’s first-, second- and third-tier cities. Habitat International, 57, 24-42.
- Zhao, S., Zhan, H., Jiang, Y., & Pan, W. (2017). How big is China’s real estate bubble and why hasn’t it burst yet? Land Use Policy, 64, 153-162.
-
Impact on poverty and income inequality in Malaysia’s economic growth
Rabiul Islam 
,
Ahmad Bashawir Abdul Ghani ,
Irwanshah Zainal Abidin ,
Jeya Malar Rayaiappan
doi: http://dx.doi.org/10.21511/ppm.15(1).2017.05
Problems and Perspectives in Management Volume 15, 2017 Issue #1 pp. 55-62 Views: 12038 Downloads: 5746 TO CITE АНОТАЦІЯPoverty and income inequality are extreme issues that still exist in Malaysia. Any rise in poverty and income inequality definitely affect economic growth. There are many great efforts taken by the government of Malaysia to eradicate poverty and to reduce the gap of income inequality which occurs since 1970’s. The incidence of poverty and income inequality is higher in rural areas compared to urban areas. This paper is mainly to study the level of poverty and income inequality in Malaysia together with government intervention to develop Malaysia’s economic growth. The research is focused among the working people at Ipoh, Perak. In this paper, questionnaire forms are being distributed to get information regarding the issue of poverty and income inequality. It also looks into the strategies taken by the government of Malaysia to eradicate poverty and income inequality. Few recommendations are given in terms of education policy, financial aid and assistance from government and non-government organization (NGO) to upgrade the standard and quality of living among the poor and lower-income group of people.
-
Impact of inflation on economic growth: evidence from Nigeria
Anthony Olugbenga Adaramola ,
Oluwabunmi Dada
doi: http://dx.doi.org/10.21511/imfi.17(2).2020.01
Investment Management and Financial Innovations Volume 17, 2020 Issue #2 pp. 1-13 Views: 9347 Downloads: 5625 TO CITE АНОТАЦІЯIn an attempt to examine the influence of inflation on the growth prospects of the Nigerian economy, the study employs the autoregressive distributed lag on the selected variables, i.e. real gross domestic product (GDP), inflation rate, interest rate, exchange rate, degree of economy`s openness, money supply, and government consumption expenditures for the period 1980–2018. The study findings indicate that inflation and real exchange rate exert a significant negative impact on economic growth, while interest rate and money supply indicate a positive and significant impact on economic growth. Other variables in the model depict no influence on the economic growth of Nigeria. The causality result shows the unidirectional relationships between interest rate, exchange rate, government consumption expenditures and gross domestic product. However, inflation and the degree of openness show no causal relationship with gross domestic product. As a result, the study recommends that a more pragmatic effort is needed by the monetary authorities to target the inflation vigorously to prevent its adverse effect by ensuring a tolerable rate that would stimulate the economic growth of Nigeria.
-
Formalization of the impact of imbalances in the movement of financial resources on economic growth of countries in Central and Eastern Europe
Serhiy Kozmenko ,
Maxim Korneyev
doi: http://dx.doi.org/10.21511/afc.01(1).2017.06
Accounting and Financial Control Volume 1, 2017 Issue #1 pp. 48-58 Views: 7973 Downloads: 1381 TO CITEThe article deals with the impact of financialization on economic growth in countries of Central and Eastern Europe. It determinesthe impact of imbalances in the movement of financial resources caused by financialization on economic growth of these countries. It proves that the implementation of measures aimed at increasing the openness of the economy and maintaining solvent demand have a positive impact on economic growth of the surveyed countries in the long run. It also proves the importance of developing a set of measures of strategic nature regulating imbalances in the movement of financial resources caused by financialization.
