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Year 2016, Volume: 6 Issue: 4, 1998 - 2006, 01.09.2016

Abstract

Impact of Economic Growth, Foreign Direct Investment and Financial Development on Stock Prices in China: Empirical Evidence from Time Series Analysis

Year 2016, Volume: 6 Issue: 4, 1998 - 2006, 01.09.2016

Abstract

The study aims to empirically examine the dynamic relationship between GDP, stock prices, FDI and domestic credit to the private sector for China by using the ARDL approach for the period 1999Q1:2015Q1. The study confirmed the long-run cointegration among the variables. The empirical results revealed that stock prices and the associated regressors are in a long-term equilibrium relationship; stock prices converge to the long-run equilibrium position by 18.6% speed of adjustment via channel of GDP, stock price, FDI, and domestic credit to the private sector. The findings of the study further revealed that FDI has a positive impact on stock prices in the long-run, while financial development has a negative effect. The robustness of the ARDL bounds test of cointegration was examined by using Johansen and Juselius’s (1990) maximum likelihood cointegration approach. Finally, the results of Granger causality under the framework of VECM showed a unidirectional short-run Granger causality that runs from stock prices to economic growth and from economic growth to FDI, specifying the absence of the FDI-led growth hypothesis. Likewise, a bi-directional causality has been found between financial development and stock prices.

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Details

Other ID JA35AE82VG
Journal Section Research Article
Authors

Faisal Faisal This is me

Peshraw Majid Muhammad This is me

Turgut Tursoy

Publication Date September 1, 2016
Published in Issue Year 2016 Volume: 6 Issue: 4

Cite

APA Faisal, F., Muhammad, P. M., & Tursoy, T. (2016). Impact of Economic Growth, Foreign Direct Investment and Financial Development on Stock Prices in China: Empirical Evidence from Time Series Analysis. International Journal of Economics and Financial Issues, 6(4), 1998-2006.
AMA Faisal F, Muhammad PM, Tursoy T. Impact of Economic Growth, Foreign Direct Investment and Financial Development on Stock Prices in China: Empirical Evidence from Time Series Analysis. IJEFI. September 2016;6(4):1998-2006.
Chicago Faisal, Faisal, Peshraw Majid Muhammad, and Turgut Tursoy. “Impact of Economic Growth, Foreign Direct Investment and Financial Development on Stock Prices in China: Empirical Evidence from Time Series Analysis”. International Journal of Economics and Financial Issues 6, no. 4 (September 2016): 1998-2006.
EndNote Faisal F, Muhammad PM, Tursoy T (September 1, 2016) Impact of Economic Growth, Foreign Direct Investment and Financial Development on Stock Prices in China: Empirical Evidence from Time Series Analysis. International Journal of Economics and Financial Issues 6 4 1998–2006.
IEEE F. Faisal, P. M. Muhammad, and T. Tursoy, “Impact of Economic Growth, Foreign Direct Investment and Financial Development on Stock Prices in China: Empirical Evidence from Time Series Analysis”, IJEFI, vol. 6, no. 4, pp. 1998–2006, 2016.
ISNAD Faisal, Faisal et al. “Impact of Economic Growth, Foreign Direct Investment and Financial Development on Stock Prices in China: Empirical Evidence from Time Series Analysis”. International Journal of Economics and Financial Issues 6/4 (September 2016), 1998-2006.
JAMA Faisal F, Muhammad PM, Tursoy T. Impact of Economic Growth, Foreign Direct Investment and Financial Development on Stock Prices in China: Empirical Evidence from Time Series Analysis. IJEFI. 2016;6:1998–2006.
MLA Faisal, Faisal et al. “Impact of Economic Growth, Foreign Direct Investment and Financial Development on Stock Prices in China: Empirical Evidence from Time Series Analysis”. International Journal of Economics and Financial Issues, vol. 6, no. 4, 2016, pp. 1998-06.
Vancouver Faisal F, Muhammad PM, Tursoy T. Impact of Economic Growth, Foreign Direct Investment and Financial Development on Stock Prices in China: Empirical Evidence from Time Series Analysis. IJEFI. 2016;6(4):1998-2006.