ON STOCK MARKET DEVELOPMENT, BANKS AND
ECONOMIC GROWTH IN INDIA
Pratap Chandra Biswal
Using the stock market development indicators viz., market size, liquidity, and volatility along with bank credit to GDP ratio as an indicator of banking sector development, and Index of Industrial Production (IIP) as the proxy for GDP, this paper examines the role of stock markets and banks in promoting economic growth in India. On the basis of monthly data (1991:1–1998:12), the present study shows that stock market size and banking development are positively correlated with economic growth. The paper also finds that the stock market liquidity and volatility are not robustly linked with economic growth.
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