Bank Stock Returns and Economic Growth

50 Pages Posted: 20 Jul 2007

See all articles by Rebel A. Cole

Rebel A. Cole

Florida Atlantic University

Fariborz Moshirian

Institute of Global Finance, UNSW Business School

Qiongbing Wu

Western Sydney University

Multiple version iconThere are 2 versions of this paper

Date Written: May 2007

Abstract

Previous research has established (i) that a country's financial sector influence future economic growth and (ii) that stock market index returns affect future economic growth. We extend and tie together these two strands of the growth literature by analyzing the relationship between banking industry stock returns and future economic growth. Using dynamic panel techniques to analyze panel data from 18 developed and 18 emerging markets, we find a positive and significant relationship between bank stock returns and future GDP growth that is independent of the previously documented relationship between market index returns and economic growth. We also find that much of the informational content of bank stock returns is captured by country-specific and institutional characteristics, such as bank-accounting-disclosure standards, banking crises, enforcement of insider trading law and government ownership of banks.

Keywords: Banks, Economic Growth, Emerging Markets, Financia

JEL Classification: G14, G15, G21

Suggested Citation

Cole, Rebel A. and Moshirian, Fariborz and Wu, Qiongbing, Bank Stock Returns and Economic Growth (May 2007). Available at SSRN: https://ssrn.com/abstract=1001155 or http://dx.doi.org/10.2139/ssrn.1001155

Rebel A. Cole

Florida Atlantic University ( email )

College of Business
777 Glades Road
Boca Raton, FL 33431
United States
1-561-297-4969 (Phone)

HOME PAGE: http://rebelcole.com

Fariborz Moshirian

Institute of Global Finance, UNSW Business School ( email )

Sydney, NSW 2052
Australia
+61 2 93855859 (Phone)
+61 2 94877519 (Fax)

Qiongbing Wu (Contact Author)

Western Sydney University ( email )

Locked Bag 1797
Penrith South DC, NSW 2751
Australia
+61-2-96859805 (Phone)
+61-2-96859105 (Fax)

HOME PAGE: http://www.uws.edu.au/staff_profiles/uws_profiles/doctor_linda_wu

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