Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

The Impact of Stock Markets on Economic Growth - Essay Example

Comments (0) Cite this document
This essay talks about the influence that the world stock markets exert on the world economy in terms of growth. Stock markets stimulates specialization, distribution and receiving relevant information. Stock markets can reduce significantly the costs of mobilizing savings and assist attracting foreign investors…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.6% of users find it useful
The Impact of Stock Markets on Economic Growth
Read TextPreview

Extract of sample "The Impact of Stock Markets on Economic Growth"

Download file to see previous pages This paper describes the mechanism of the of the impact of stock market on long-term economic indicators, regarding the growth of the economy. Main channels of stock markets influence on economic growth of a country are specified.
It is known that stock markets are connected with the economic growth through the creation of liquidity. It means that really profitable investments demand just long-turn capital commitment, but investors don’t want to relinquish their capital for such long time without any control. Actually liquid stock markets make their investments more secure and in such way more attractive. Stock markets allow investors to acquire equity (an asset) and then to sell it rather quickly and without any problems.
Liquid stock markets facilitate long-term investments and make them more profitable. It is apparent that stock markets are necessary and important for growth, because they improve capital allocation and in such a way they enhance prospects for long-term economic development. Stock markets as it was mentioned above make investments more secure and attractive.
Actually well-functioning stock market is useful and necessary for economic development through following issues: growth of investments and savings, effective and efficient resources allocation, better distribution and utilization of existing resources.
Volatility of stock markets had negative influence in France and Japan. Stock market volatility didn’t affect greatly the United Kingdom. Concerning Germany the volatility was stated to be insignificant.
...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“The Impact of Stock Markets on Economic Growth Essay”, n.d.)
The Impact of Stock Markets on Economic Growth Essay. Retrieved from
(The Impact of Stock Markets on Economic Growth Essay)
The Impact of Stock Markets on Economic Growth Essay.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF The Impact of Stock Markets on Economic Growth

Economic Indicators' Impact on Different Stock Categories

... done on the linkage between stock markets and macroeconomic variables. While some studies have focussed on industrialised and developed economies others have focussed on the developing economies. Also, while some studies have attempted to see the impact of one macroeconomic variable on the stock prices, others have used two or more variables to see the link between macroeconomic variables and stock markets. Some of the economic indicators that influence stock prices as suggested in various studies include: Inflation, Unemployment, Interest Rates, Exchange Rates, Gross Domestic Product (GDP), Industrial Production, M2 Money Supply, and so forth. The subject of how economic indicators influence stock prices or stock returns has been studied...
25 Pages(6250 words)Research Paper

Economic Portfolio - Economic Growth

... Economic growth: In every economy, there are always four main macroeconomic objectives which are, price stability, economic growth, balance of payment and full employment. To achieve this objective, both fiscal and monetary policies have to be implemented. Normally for any particular economy, both social and political problems are the key factors relevant in achieving all the four objectives. Fiscal policy refers to expenditure and taxation policies central government, that are implemented by the ministry of finance through special agencies, directly or through area ministries, where as, monetary policies are the government’s regulations of the interest rate level and money supply in the economy. Usually, the monetary policy is executed...
3 Pages(750 words)Coursework

Value Stock Versus Growth Stock

... Value Stocks Versus Growth Stock Fama and French define value stocks as undervalued stocks which are under priced. These stocks have high ratio of book value to market value. Similarly growth stocks are defined as those stocks which are considered by the market as blue chip stocks and are trading at a high price because of high demand for these stocks in the market. In essence, dividend yield and PER of value stocks is better than growth stocks because of their high market price which declines dividend yields and worsens the price earnings ratio. Their findings revealed that CAPM model is inadequate in explaining stock prices fluctuations because it is concerned with only one element of risk i-e beta. In real world, there are more risks...
6 Pages(1500 words)Essay

Economic Growth

... Theory: An Exposition, Oxford University Press, Oxford. 11. Temple, J. (1999), ‘The new growth evidence’, Journal of Economic Literature 37(1). 12. Barro, R. J. (1974), ‘Are government bonds net wealth?’, The Journal of Political Economy 13. Stevenson, A., Muscatelli, V. & Gregory, M. (1988), Macroeconomic Theory and Stabilisation Policy, Philip Allan. 14. Nickell, S. (1997), ‘Unemployment and labor market rigidities europe versus north america’, The Journal of Economic Perspectives 11(3). 15. Nickell, S. (1998), ‘Unemployment: Questions and some answers’, The Economic Journal 108(448)....
7 Pages(1750 words)Essay

Economic growth

Viele Accounting. Pg 224-225, Question p6 a) Truck 28200 Notes Payable 28200

b) Truck 28200
Capital lease liability (4.6229 * 6100) 28200

Depreciation Expense 4700
Accumulated Depreciation 4700

c) Interest Expense 2256
Capital Lease Liability 3844
1 Pages(250 words)Assignment

Stock and Commodity Markets

...Dissertation Proposal Role of Stock and Commodity Markets in the Growth of an Economy like Libya Background Liberalization and globalization has opened up newer vistas of trade and business all around the globe. It is said that opening up of economies has now tilted the balance in favor of market forces, which is helping the consumer by way of providing quality at reasonable prices. As a result of globalization market forces have started the policies with the role of respective governments becoming limited in determining the nature of imports and exports. It is now the MNCs who are effectively dictating the policies to the governments. With globalisation, MNCs began to explore the markets outside there domestic grounds. Stock...
5 Pages(1250 words)Essay

Finance- Global Stock Markets

... the election: The campaign uncertainty and predictions of disaster for the Presidents party had no negative impact on the stock market. On October 28, 2010, only days before the election New York Times columnist Paul Krugman wrote, “future historians will probably look back at the 2010 election as a catastrophe for America, one that condemned the nation to years of political chaos and economic weakness.” His piece concluded with this warning: “So if the elections go as expected next week, here’s my advice: Be afraid. Be very afraid.” (Krugman, 2010) The elections went as predicted and the stock market was largely unaffected; In the ensuing four weeks it rose by USD 36.55 or 0.33%. At the same time Israel and the United States went through...
4 Pages(1000 words)Essay

Economic growth

...Economic Growth 4(a) Y = Output per worker K = Physical capital per worker A>0 =Product parameter is constant Y = AK^0.5 Considering the level of capital that is the golden rule, then y = n + δ. Given parameter values and the capital per person the result is: y= (1/2) K^1/2 = (1/2) * 4^1/2 = 0.25 > n + δ = 10 For a country or a particular area to develop, it is important to ensure that the product parameter is always positive and thus the reason why it has to be above zero at all times. Having a negative product parameter leads to a negative result that is not the goal of any country. Physical capital is vital for any organization for it shows the amount that the person ventured into the business bearing. This capital is later subtracted...
2 Pages(500 words)Math Problem

Economic Growth

.... As a result, less is available for spending on investment opportunities thus leading to slow economic growth. Moreover, with increment in government on infrastructure and other facilities, taxes will rise hence straining the working population wages to the extent that they will have less to spend on economically productive activities thus leading to slow economic growth (George, 8). Externally, Singapore faces competition from other established nations like China, Asia and Germany. Singapore is finds it difficult to cope up with such nations since it has limited resources to produce its exports as compared to these neighboring nations. Due to this, it owns a little share for its GDP in the global market as compared to these neighboring...
8 Pages(2000 words)Essay

Economic Analysis of India


8 Pages(2000 words)Case Study

Immigration and Its Impact on the United Kingdom

For example, for farming communities, fertile and well-watered land has been a pull factor in migration. Business opportunities and political stability are also examples of pull factors.
Since the turn of the 20th century, Great Britain and Northern Ireland have experienced a great influx of foreigners migrating into the country due to pull or push factors. There have been different waves of migrations to the United Kingdom, which has had different impacts. Because of this, the United Kingdom has had to respond in several ways, which includes coming up with new acts on immigration, nationality, and providing asylum to refugees.1 However, the topic of migration to the United Kingdom has attracted different political views and...
23 Pages(5750 words)Assignment

Bernard Madoff : A Scapegoat of the Economic Crisis

Darwin was condemned and treated with contempt by the Church for proposing the theory of evolution that linked all living matter in the earth, including humans. In the case of Bertrand Russell, he was imprisoned as a conscientious objector, for expressing his opposition to British participation in the First World War. These are typical examples of people being wrongfully punished when they were guilty of no crime or fraud or misdoing. It would be highly improper to associate Bernard Madoff with the aforementioned luminaries, for he was truly guilty of carrying out the biggest financial fraud in modern history. At the same time, it would be simplistic to classify him as a victim of the contemporary judicial system. The truth, in fa...
6 Pages(1500 words)Assignment

Economic Models: The Free Market and The State Owned System

The free market concept is mainly a theoretical concept as every country, even capitalist ones place some restrictions on the ownership and exchange of commodities (Free market economy). Therefore, the term free-market economy primarily means a system where the buyers and sellers are solely responsible for the choices they make. It gives the buyers and sellers the power to do business without being afraid of any regulations and intervention by the state. Hence, a free market gives the absolute power to prices to determine the allocation and distribution of goods and services (Free Market Economy). The pricing mechanism is in turn, driven by the forces of demand and supply of goods and services. Demand and supply of...
9 Pages(2250 words)Case Study

Economic Analysis on BMW Cars in the US Car Industry

Mini and the 1-series rapidly grew at a much higher rate through 2008. Since the early days of the new millennium, BMW has been one of the first automakers to utilize flexible factories in which more than one vehicle model could be produced at the same time. This enabled the company to meet shifts in market demand more effectively than BMW’s competitors could. BMW challenges to retain its market position in the international market for luxury cars. Many automakers, such as Hyundai with its Genesis sedan or Nissan's Infiniti brand are increasingly successful in realizing higher margins earned on luxury vehicles. BMW is rated behind luxury brands such as Lexus, Porsche, Mercedes, and Infiniti for these reasons

1. Th...
7 Pages(1750 words)Case Study

Globalization and World Economic Forum at Davos 2010

...Globalization and World Economic Forum at Davos Forces Driving Globalization Globalization has resulted in enhanced interdependencies among thenations of unprecedented scale. This augmented interdependence has caused the dismantling of trade barriers and liberalization of markets. The forces of globalization have impacted the nations, the firms and the individuals alike with the prerequisite of liberalization of trade (Awuah, 2009). The seven forces of globalization are; Markets, Production, Culture, Labor, Technology, Environment and Liberalization. Of these factors, the globalization of markets has engaged substantial attention of the firms and the academia. Some markets are highly globalized, while some are not. The scale of market...
7 Pages(1750 words)Coursework

Introductory Economics and Finance: Why Governments Regulate Firms and Markets

By government regulation, it is meant by the rules administered by a government or government agency to influence any economic activity which determines the price, types, and standards of products, and most importantly the conditions under which the entry and exit of the firms are possible.

Like death, it is impossible to keep away from regulation in about every aspect of daily life. The business regulation may be classified into two- economic and social (Litan). The economic regulation deals with price controls and the entry limits of the firms into markets. The second type regulation mostly deals with externalities (the outside influences of the company or firm which may or may not be decided by them)

6 Pages(1500 words)Assignment

The Trends in the Steel Industry and How It May Impact Nucor Corporations Strategy

The whole organization at Nucor’s revolves around the laid principles and focus on reinforcing to the extent that the organization is known for its culture and quality. Simultaneous quality checks and adherence are also as important building a strong culture for the organizations.

Nucor Corporation has always tried to challenge itself for further progress and to keep abreast of the industry of steel business.

Let us look at the trends observed in the business of the steel industry. The trend in the steel industry is very dynamic and always impacted by internal and extraneous factors. For almost 50 years the United States of America reigned in the industry of steel production, almost half of the entire p...
8 Pages(2000 words)Case Study

Impact on Employment Lifecycle

Chapter 5: Conclusions: This chapter will detail the conclusions of the research and will also include the recommendations by the researcher. The limitations of this research will also be included and further research recommendations for the same will also be included.
Human resource managers have a major impact on organizations and they hold a very responsible position. The duties of the HR managers are to ensure that the organization employs the right set of employees and there is also a good mix of skills within the organization. It is also to ensure that all the activities and processes relating to the employees are handled and completed in sync with the culture, values, and mission of the company.
The main reason to...
8 Pages(2000 words)Assignment

Diversification in Emerging Stock Markets

... will enhance the government’s effort towards more diversification and resilience towards unhealthy investments. Fig: Market Capitalization of GCC countries Russia Elaborate studies by Madura (2008) show that the Russian economy grew by almost 6% for over a decade until 2008 when the global financial crisis had a similar impact as it had on most other stock markets across the world. In the backdrop of strong consumption at home and a low likelihood of any spikes in oil prices, it is expected that these growth rates will continue to remain high in the coming years. However, sustaining this economic growth is a challenging task due to many structural constraints. Although Russia enjoys the benefit of rich human capital, development long...
41 Pages(10250 words)Research Paper

The 1846 Invasion into Mexico by the U. S.: The Political and Economic Forces that Brought about the Invasion

Some of the territories led to a war with Mexico from which the United States emerged victorious, expanding its territories and decisively establishing its dominance in North America.

President Andrew Jackson led an example of an administration that set the stage for the way in which James Polk would lead. In 1817, as a still yet military leader, Jackson led the United States into the first of three conflicts with the Seminole Indians from which the acquisition of Florida from Spain would be negotiated and finalized. The situation with Spain was tenuous and should have been dealt with in a diplomatic and cautious manner, but in 1817 President Monroe wrote a letter to General Jackson stating that “Great interests...
8 Pages(2000 words)Article
sponsored ads

Let us find you another Essay on topic The Impact of Stock Markets on Economic Growth for FREE!

Contact Us