...Review of Development Economics, 9(2), 166–176, 2005 Endogenous Growth Models and Stock Market Development: Evidence from Four Countries Guglielmo Maria Caporale, Peter Howells, and Alaa M. Soliman* Abstract This paper re-examines the relationship between stock market development and economic growth. It provides a theoretical basis for establishing the channel through which stock markets affect economic growth in the long run. It examines the hypothesis of endogenous growth models that financial development causes higher growth through its influence on the level of investment and its productivity. The empirical part of this study exploits techniques recently developed to test for causality in VARs. The evidence obtained from a sample of four countries suggests that investment productivity is the channel through which stock market development enhances the growth rate in the long run. 1. Introduction Several theoretical and empirical papers such as Levine (1991), Levine and Zervos (1995), Demirguc-Kunt (1994), Demirguc-Kunt and Levine (1995), Rousseau and Wachtel (2000) and Beck and Levine (2003), have suggested that stock market development affects economic growth in developing countries. The common problem with these studies, however, is that there is no discussion of the channels through which stock markets can stimulate economic growth. In traditional growth theory, the growth rate is a positive function of exogenous technical progress. However, financial development...
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...Introduction to Stock Exchanges ------------------------------------------------- Meaning, purpose, working of stock exchanges in India; various terms used in stock exchanges, trading in stock exchanges, clearing and settlement, rolling settlement, online trading, internet trading, market indices, types of public issue Which is benchmark stock market index of India? How many securities are there in Nifty Index? How many securities are there in Sensex? Which index will have high volatility Nifty or BSE Midcap? What do you mean by primary market? ------------------------------------------------- What do you mean by secondary market? What do you mean by stock split? What do you mean by Bonus Issue? What do you mean by Buy Back? What do you mean by Right issue of shares? What are ADR’s? ------------------------------------------------- What is the difference in between IPO and FPO? Risk-Return analysis Risk meaning and Measurement – Types of Risk – Systematic, Unsystematic risk, Beta Coefficient, Alpha, CAPM theory etc. What is return? Expected rate of Return, computation formulae. Case studies on risk-return using standard deviation, variance, probability and other statistical tools. ------------------------------------------------- What is beta? ------------------------------------------------- What is cost of equity? ------------------------------------------------- What is WACC? ------------------------------------------------- ------------------------------------------------- ...
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...International Journal of Business and Management March, 2009 Relationship between Interest Rate and Stock Price: Empirical Evidence from Developed and Developing Countries Md. Mahmudul Alam (Corresponding author) CRM, Marketing Division, Grameenphone Ltd 47 Shantinarar, Dhaka 1217, Bangladesh Tel: 880-1711-503-782 E-mail: rony000@gmail.com Md. Gazi Salah Uddin Department of Business Administration East West University 43, Mohakhali C/A, Dhaka 1212, Bangladesh E-mail: rimsust2002@yahoo.com Abstract Stock exchange and interest rate are two crucial factors of economic growth of a country. The impacts of interest rate on stock exchange provide important implications for monitory policy, risk management practices, financial securities valuation and government policy towards financial markets. This study seeks evidence supporting the existence of share market efficiency based on the monthly data from January 1988 to March 2003 and also shows empirical relationship between stock index and interest rate for fifteen developed and developing countries- Australia, Bangladesh, Canada, Chile, Colombia, Germany, Italy, Jamaica, Japan, Malaysia, Mexico, Philippine, S. Africa, Spain, and Venezuela. Stationarity of market return is tested and found none of this stock market follows random walk model, means not efficient in weak form. To investigate the reasons of market inefficiency, relationship between share price and interest rate, and changes of share price and changes of interest...
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...Assignment on: Stock Market Problems and Solution in the Context of Bangladesh Capital Market What are the reasons of inefficient stock market in Bangladesh? What can be done to develop the stock market? Stock market is a financial market, where stocks and bonds are used to buy and sell. Shareholders i.e. investors exchange their shares in the stock market. The current market price of a share is determined by the demand and supply of that particular share. Before we go through the reasons of inefficient stock market I would like to clarify about inefficient stock market. Inefficient Stock Market It refers that type of stock market which is not stable and healthy for investors. In inefficient stock market price level fluctuates so much. Market can not absorb large number of securities without changing price level. The main cause of share market fall is this, the inefficient stock market. Last year we have experienced a huge crash in Dhaka & Chittagong Stock Exchange. If we would recall, Dhaka Stock Exchange Gen. Index (DGEN) soared to its highest levels from October to December last year, with the peak on Dec. 5, 2010 at 8,918 points. DSE’s index on Jan. 3, 2010 was at 4568.40 and went up at a staggering 4,350 points or 95.23% increase! But 2weeks later, Jan. 10, 2011, trading on the Dhaka Stock Exchange was halted after it fell by 660points, or 9.25%, in less than an hour, the biggest one-day fall in its 55-year history. Police and angry retail...
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...STOCK MARKET: Stock Exchange (also called Stock Market or Share Market) is one important constituent of capital market. Stock Exchange is an organized market for the purchase and sale of industrial and financial security. It is convenient place where trading in securities is conducted in systematic manner i.e. as per certain rules and regulations. It performs various functions and offers useful services to investors and borrowing companies. It is an investment intermediary and facilitates economic and industrial development of a country. Stock exchange is an organized market for buying and selling corporate and other securities. Here, securities are purchased and sold out as per certain well-defined rules and regulations. It provides a convenient and secured mechanism or platform for transactions in different securities. Such securities include shares and debentures issued by public companies which are duly listed at the stock exchange, and bonds and debentures issued by government, public corporations and municipal and port trust bodies. STOCK MARKET OF BANGLADESH: Bangladesh has two Stock Exchanges, Dhaka Stock Exchange (DSE), where trading is conducted by Computerized Automated Trading System and Chittagong Stock Exchange (CSE), which is also conducted by Computerized Automated Trading System . All exchanges are self-regulated, private sector entities which must have their operating rules approved by the SEC. The Chairman and Members of the Commission are appointed by...
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...Frequently Asked Questions (FAQ) segment that will be posted to the Web site soon. Specifically, some of the respondents have compared investing in the stock market as a no-win situation, and only the institutional investors can win. These respondents would like a response that further clarifies your firm's position regarding risk in light of these types of statements. Research stock market investments using your text, course materials, and Web resources. What disadvantages do small investors face when investing in the stock market? What advantages are presented to these small investors? Post a new topic to the Discussion Board that contains your answers to the above questions. Respond to 2 other students' posts on the Discussion Board that critiques their answers. I work for a large investment firm and recently wrote a position article on the firm's approach to investing for small investors. It has generated e-mail responses from potential clients and my firm is asking me to address some of their questions. Some of the respondents have compared investing in the stock market as a no-win situation. They would like a response that further clarifies the first position regarding risk in light of these types of situations. In this discussion I will attempt to explain the disadvantages small investors face in the stock market and the advantages that are presented to these small investors. A few of the issues of what I mention is based off of my own personal...
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...Recent trend of stock market Abstract This report examines the recent bullish uptrend of stock market. Last few months the stock market is claiming upward very quickly. Sadden inject of huge money has created a huge demand of shares in stock market. But the supply of shares has not matched with the demand side recipe. Because of demand-supply mismatch value of many shares has become overpriced and bullish trend is supposed to persist. Everyday peoples are coming to stock market for earning profit. But it is not a safe time to invest in stock market. Introduction: Stock market is an important part of financial system .It is one of the important avenues for channeling fund to entrepreneurs from public savings .stock market of Bangladesh is a growing market .There are two stock exchange in Bangladesh .one is Dhaka stock exchange and other is Chittagong stock exchange .Recent few years stock market of Bangladesh is growing rapidly .It is a very good sign for entire economy. Generally strong stock market performance is associated with strong economic fundamentals, and one should be pleased with the outcome. A strong stock market is much needed for economic growth. But from the beginning of the year 2010 the stock market is showing very bullish trend. There is an inflow of huge cash in stock market. So the demand of share is very high. But supply of the share was insufficient over the year. It has created an imbalance situation of demand and supply in stock market. As a result...
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...Abstract This project documents and describes the buying and selling of stocks that we purchased using $ 100,000 USD (Monopoly money) given to us by our instructor. Our assignment was to invest the stock in any way seen best fit to gain the most profit. We were to track our stocks three times a week and document the results using Microsoft Excel. The requirements for the assignment were to include two stock trades and to try to make our portfolio diverse using different sectors. The purpose of this project is to understand how the stock market works, and give us a better understanding of how the stock market operates. As a beginning investor, I tried to keep my initial stocks as an even investment for the most part. I invested my money into stocks that I felt would be successful and I knew that I would spend my own money on to help the stock increase. The attached Excel spreadsheets will describe in detail the beginning investment, the first and second adjustment, and my final outcome including my total gains/losses. To complete the project, my stocks were sold for me to cash out and my results were documented. Introduction At the beginning of this project, I felt very confident in being able to make a profit by the end of the class by just picking the most popular- trendy companies that were available in the market for a decent price. Without even looking at the history of the company or doing research on the price history at the leaset....
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...STOCK MARKET CRASH OF BANGLADESH IN 2010-11 History of the stock market crashes show that ‘Bull Run’ before a stock market crash is kind of normal phenomenon. There was no exception for the stock market crash of Bangladesh in 2010-11. Most important factors that guided to the Bull Run are described here. Root of bubble Due to political conflict of Bangladesh state of emergency was declared and military took power of the country in 2007. Moreover, during military-backed regime investment in real sectors as well as FDI decreased but the inflow of foreign remittance increased. At that time, investors were looking for alternative investment sector to invest their savings and found stock market as an attractive alternative. According to Centre for Policy Dialogue (CPD) 2011, the total number of BO Account holders on 20th December, 2010 reached to 3.21 million though the number was 1.25 million in December 2009. Most of these new investors don’t have enough knowledge about the stock market but invest their most or all savings in the market. However, 238 brokerage houses opened 590 branches at 32 districts. As CPD (2011) found, there are some factors which attracts investors such as internet-based trading operation, opening branches of brokerage houses across the country, easy access to the market information, arranging a countrywide 'share mela (fair)'. Unfortunately, to chase huge capital of too many investors, there were not enough supplies of new securities through IPOs in the market...
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...Software Requirements Specification for Stock Market Simulator Version 1.0 approved Prepared by Divesh Mirchandani, Abhishek Oturkar, Sumit Kriplani, Kedar Nadkarni 30-01-2015 Table of Contents Table of Contents ii Revision History ii 1. Introduction 1 1.1 Purpose 1 1.2 Document Conventions 1 1.3 Intended Audience and Reading Suggestions 1 1.4 Product Scope 1 1.5 References 2 2. Overall Description 2 2.1 Background 2 2.2 System Context 2 2.3 System Capabilities 3 3. Behavioural Requirements 4 3.1 System Inputs & Outputs 4 3.2 Detailed Output Behaviour 4 3.3 Software Interfaces 4 3.4 Communications Interfaces 4 4. Quality Requirements 12 5. Fundamental Assumptions 12 6. Expected Changes 12 7. Appendices 13 Introduction 1 Purpose To fully document the expected functionality and requirements for our Stock Market Simulation Game. 2 Document Conventions • Concept of Operations gives a user-oriented, high-level overview of our Stock Market Simulator. • Behavioral Requirements gives a more-detailed vision of the simulator's operations, which is better suited to developers and those interested in the technology. 3 Intended Audience and Reading Suggestions The set of stakeholders includes the team members, the project and overseeing managers, and potential users of our stock market simulation. • Team Members - can use this document to gain a detailed understanding...
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...The investment instruments have mentioned their advantages and disadvantages. Stocks are nowadays raising star. There is plenty attention to the stock market today as more Filipinos are being attracted into investing in equities because of its great performance in the last two to three years. A lot of investors are very positive with the local stock market and investors will find many experts predicting that the stock market will further go up this year. Investing in equities nowadays is also more convenient. Even with only a small amount, investors can buy stocks through brokers (and also online) or through combined funds such as mutual funds. The stock market is not as predictable as people think it is and all the gains over the last three years can also be wiped out in a short period of time. Furthermore, investing in the stock market especially when an investor plans to trade requires a lot of competency and time. If an investor does not have the competency and the time to trade in the stock market, they should keep their...
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...function of the stock market is to enable trade in the shares of public companies, which in turn reflect the performance of the companies whose shares are traded in the stock market. Stock markets are also a very important part of an economy or the economic system of a country. Today most economies around the world are judged by the performance of their stock markets. The stock markets serve a vital purpose in the growth and development of a company that wants to expand. Such companies with expansion plans and new projects are in need of funding and the stock market serves as the best platform from which a company can ‘sell’ itself to the discerning public on the basis of merit among other things. To trade in the stock market a company has to be absolutely transparent about its vital fundamentals such as revenues, income, assets, liabilities, infrastructure, etc. as this allows the investing public to make a fair assessment of the said company’s market worth. The stock markets function on the basis of two principles, which are better known as: Primary markets – When a company decides to sell its shares to the public through an (Initial Public Offer) IPO then it can be said that it is operating in the primary market. In fact, for companies that offer their shares to the public for the first time, this process is a mandatory requirement and involves a few stages of compliance with the market regulator that eventually allows it to trade in the stock market. Secondary...
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...Section: Investing STOCKS & MARKETS Failure by regulators and exchanges to pinpoint what caused wild equities swings on May 6 might sap investor confidence in the stock market As if individual investors lacked reasons to mistrust the stock market, along came May 6's gut-wrenching, 9.2 percent drop in the Dow Jones industrial average. The rapid stock plunge — followed by an equally quick, partial rebound in which the Dow regained nearly half its losses — surprised retail investors. Days later, they are trying to digest the realization that the market action during the so-called "flash crash" has bewildered the pros, too. "I still haven't heard a satisfactory answer as to what happened and what could be done about it," said Frank C. Boucher, who heads a financial planning firm in Reston, Va., on Monday, four days after the market's drop. The U.S. Securities & Exchange Commission, charged with regulating the stock market, has offered no explanation. SEC Chairman Mary Schapiro met with the heads of six major exchanges on May 10. According to an SEC statement, a main part of the agenda was "discuss[ing] the causes of Thursday's market events [and] the potential contributing factors." A U.S. House of Representatives subcommittee is expected to examine the reasons for the stock plunge at a hearing on May 11. Among possible causes, media analysts and traders have cited erroneous trades, currency spikes, market regulations, and high-frequency, computerized trading. no "single...
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...STOCK MARKET I. Defination. 1. Securities. Stock is evidence confirming the rights and legitimate interests of the owner of the property or the capital of the issuer. Securities are shown in the form of certificates, book entries or electronic data. Types of securities including: stocks, bonds, certificates of investment funds, derivative securities… Securities may be represented by a certificate or, more typically, "non-certificated", that is in electronic or "book entry" only form. Certificates may be bearer, meaning they entitle the holder to rights under the security merely by holding the security, or registered, meaning they entitle the holder to rights only if he or she appears on a security register maintained by the issuer or an intermediary. They include shares of corporate stock or mutual funds, bonds issued by corporations or governmental agencies, stock options or other options, limited partnership units, and various other formal investment instruments that are negotiable and fungible. 2. The securities market ? In its actual form, the securities market is the only place where the exchanges, sale or transfer of securities; thereby changing the stock holders. II. The structure and operating principle of the securities market. 1. The structure a. Primary market Primary market is the place where the first sale of newly issued securities. The primary market is also known as first market or market issue. Function of primary market: This is the market...
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...A stock market or equity market is a public entity (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock (shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The size of the world stock market was estimated at about $36.6 trillion at the beginning of October 2008.[1] The total world derivatives market has been estimated at about $791 trillion face or nominal value,[2] 11 times the size of the entire world economy.[3] The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price. The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The largest stock market in theUnited States, by market capitalization, is the New York Stock Exchange (NYSE). In Canada, the largest stock market is the Toronto Stock Exchange. Major European examples...
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