The Impact of Capital Market Development on Economic Growth: Time Series Evidence from Singapore

Using a time series approach, this thesis investigates the impact of capital market de velopment on economic growth using Singapore as a case study for a period of 1987 - 2019. Johansen cointegration method disclosed that there exists a long run relationship in the variables. The vector error correction model revealed the coefficient of the error correction term, which implies that in the short run the values of total value of stocks traded, trade openness, gross fixed capital formation, stocks traded, turnover ratio of domestic shares and market capitalization of listed domestic companies contribute to economic growth converging to its long run by 8.68% speed of adjustment every year. The estimated long run coefficient implies that the capital market development has a statical significant positive impact on economic growth.