Impacts of Macroeconomics Environment and Governance Quality on the Stock Market in the Fourteen Developing Countries
Using the annual data from 2008 to 2016 for fourteen developing countries, this study examines the relationship between governance quality and stock market performance. This study used four different indicators, namely stock market return, stock market volatility, stock market development, and stock...
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Universiti Kebangsaan Malaysia
2020
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my.unimas.ir.338822022-09-06T01:44:12Z http://ir.unimas.my/id/eprint/33882/ Impacts of Macroeconomics Environment and Governance Quality on the Stock Market in the Fourteen Developing Countries Kelvin, Lee Yong Ming Mohamad, Jais HG Finance Using the annual data from 2008 to 2016 for fourteen developing countries, this study examines the relationship between governance quality and stock market performance. This study used four different indicators, namely stock market return, stock market volatility, stock market development, and stock market liquidity to reflect the stock market’s performance from various aspects. The study also combined the four indicators and formed a new proxy to reflect overall stock market performance by using principal component analysis. The two-step system of GMM estimation was used to test the impact of the macroeconomic environment and governance quality on stock market performance. Specifically, the results obtained show that banking sector development and governance quality have a significant negative relationship with stock market volatility. Meanwhile, the income level has a significant negative relationship with stock market volatility, development, and liquidity. These results suggest that developing countries should strengthen the position of the banking sector and allows the funds to be channeled into the stock market efficiently. Besides that, developing countries also need to improve their governance quality to attract foreign investors. Several policies shall be implemented by the developing countries to improve governance quality in the aspects of voice and accountability, political stability, government effectiveness, regulatory quality, the rule of law, and control of corruption. Universiti Kebangsaan Malaysia 2020 Article PeerReviewed text en http://ir.unimas.my/id/eprint/33882/3/Impacts%20of%20Macroeconomics%20-%20Copy.pdf Kelvin, Lee Yong Ming and Mohamad, Jais (2020) Impacts of Macroeconomics Environment and Governance Quality on the Stock Market in the Fourteen Developing Countries. Jurnal Ekonomi Malaysia, 54 (3). pp. 133-145. ISSN 0126-1962 https://ejournal.ukm.my/jem/about http://dx.doi.org/10.17576/JEM-2020-5403-10 |
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HG Finance Kelvin, Lee Yong Ming Mohamad, Jais Impacts of Macroeconomics Environment and Governance Quality on the Stock Market in the Fourteen Developing Countries |
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Using the annual data from 2008 to 2016 for fourteen developing countries, this study examines the relationship between governance quality and stock market performance. This study used four different indicators, namely stock market return, stock market volatility, stock market development, and stock market liquidity to reflect the stock market’s performance from various aspects. The study also combined the four indicators and formed a new proxy to reflect overall stock market performance by using principal component analysis. The two-step system of GMM estimation was used to test the impact of the macroeconomic environment and governance quality on stock market performance. Specifically, the results obtained show that banking sector development and governance quality have a significant negative relationship with stock market volatility. Meanwhile, the income level has a significant negative relationship with stock market volatility, development, and
liquidity. These results suggest that developing countries should strengthen the position of the banking sector and allows the funds to be channeled into the stock market efficiently. Besides that, developing countries also need to improve their governance quality to attract foreign investors. Several policies shall be implemented by the developing countries to improve governance quality in the aspects of voice and accountability, political stability, government effectiveness, regulatory quality, the rule of law, and control of corruption. |
format |
Article |
author |
Kelvin, Lee Yong Ming Mohamad, Jais |
author_facet |
Kelvin, Lee Yong Ming Mohamad, Jais |
author_sort |
Kelvin, Lee Yong Ming |
title |
Impacts of Macroeconomics Environment and Governance Quality on the Stock Market in the Fourteen Developing Countries |
title_short |
Impacts of Macroeconomics Environment and Governance Quality on the Stock Market in the Fourteen Developing Countries |
title_full |
Impacts of Macroeconomics Environment and Governance Quality on the Stock Market in the Fourteen Developing Countries |
title_fullStr |
Impacts of Macroeconomics Environment and Governance Quality on the Stock Market in the Fourteen Developing Countries |
title_full_unstemmed |
Impacts of Macroeconomics Environment and Governance Quality on the Stock Market in the Fourteen Developing Countries |
title_sort |
impacts of macroeconomics environment and governance quality on the stock market in the fourteen developing countries |
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Universiti Kebangsaan Malaysia |
publishDate |
2020 |
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http://ir.unimas.my/id/eprint/33882/3/Impacts%20of%20Macroeconomics%20-%20Copy.pdf http://ir.unimas.my/id/eprint/33882/ https://ejournal.ukm.my/jem/about http://dx.doi.org/10.17576/JEM-2020-5403-10 |
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13.18916 |