Abstract:
To investigate the impact of stock market development on economic growth in SAARC region as well as for each of the member countries. The paper employs the two dynamic panel models for the period of 1980 to 2004. The first model tries to assess the stock market effect directly where as the second one does it by having its influence through investment. The findings can be identified that both models reflected the fact that no stock market variables such as size, market activity, and liquidity have positive effect on the per capita growth rate in SAARC region. The study also finds out that stock market indicators do not have any significant impact on the growth rate of any SAARC member countries. This may be due to the small size of the stock market relative to economy.