Since easing back to approximately 3% in
Since 1996, Zimbabwe has beeninvolved in an inexorably serious monetary and political emergency and futureprospects are stressing (Organization for Economic Co-operation andDevelopment, 2002). The nation is confronting immense macroeconomic unevencharacters, in 2000 the monetary shortfall surpassed 20 for each dollar of GDPand expansion arrived at the midpoint of 56 for every dollar. Subsequently, thedevelopment rate is evaluated to have strongly diminished to – 5.5 for every dollarin 2000 and – 6.6 for every dollar in 2001 (OECD, 2002). Following a time ofwithdrawal from 1998 to 2008, the economy recorded genuine development of over10% every year in the period 2010-13, preceding easing back to approximately 3%in 2014 (indexmundi, n.d.
). In 2015 financial development eased back to 1.5% withanticipated negative inflation in 2016 and 2017 (African Development Group,2017). The economy development of Zimbabwe have proceeded on unstable way notwithstandingthat Zimbabwe Stock Exchange is settled and mechanized.
According to (Saungweme, 2013), Zimbabwean Stock Exchange is an distinctive rising stock market whoseexecution has been imperative in the previous two decades (Saungweme, 2013). Asresult, it is basic to investigate the connection between securities exchangeand financial development to define different means through which stockexchange can be utilized to animate economic development. Stock markets are prominent forplaying a very paramount role in boosting economic development throughenhancing efficacious mobilization of savings for investment as well as facilitatingcapital inflows (Jalloh, 2015). The link between financial stock market andeconomic development becomes the field of research more and more explored(Dehuan, 2010). Luintel and Khan (1999) explored bi-directional causality testbetween financial development and economic development; they found that thefinancial stock market affects economic development (Dehuan, 2010). Levine& Zervos (1996), in their research on the relationship between the stockmarket development and economic development provided empirical evidence on themajor theoretical debates about the linkages between stock markets and long-runeconomic development utilizing data on 41 countries from 1976 to 1993(Dehuan,2010).
It is commonly believed that astronomically immense decreases in stockprices are reflective of future recession, and incrementing stock prices areleading indicators of future economic development (Mun, Siong & Thing,2008). For instance, the dubiousness embedded in the recession of 2009triggered an immensely colossal-scale drop in stock prices that was reflectedin the Dow Jones and the S&P 500 (Fuentes, 2010).Levine and Zervos(1998) foundvigorous statistically consequential relationship between stock marketdevelopment and economic growth (Sajid , 2010).
Adajaski & Biekpe (2005)found a considerable positive impact of stock market development on economicmagnification in countries of upper middle-income economies (Sajid , 2010).Their findings were more reinforced by Bahadur and Neupane (2006), whoconcluded that stock markets fluctuations avail to soothsay the prospect growthof an economy ( Sajid , 2010).Husain (2006) calls attention tothat Japan has the most progressive securities exchange followed by East Asia,for example, China, Korea, Malaysia, Thailand, Singapore, Hong Kong,Philippines and Indonesia (Azam, 2016). As indicated by Ghosh and Revilla(2007), Asia’s securities exchanges have been vital wellspring of funding forthe region. As indicated by Mauro (2000) Stock market is a stable foreordainingcomponent of financial development in rising economies (Boubakari, 2010).The fast extension of stock tradesin the African mainland has added to economic improvement in different routes,for example, encouraging long haul capital mobilization, the arrangement ofelective venture openings, pulling in foreign capital inflows and serving in asa flag of economic performance (Kumo, 2009).
Yartey and Adjasi (2007)discovered that, securities exchanges add to financing of corporate venturesand subsequently development of listed firms in Africa as they are required tokeep best practices, at last prompting economic development. Well-workingsecurities exchanges, alongside all around composed establishments andadministrative frameworks will cultivate economic development (Osamwonyi,2013). Securities exchange improvement could well be a way to enable Africa toconquer the present development impasse caused by the global financial crisis(Massa, 2009).Statementof the ProblemSince 1996, economic growth ofZimbabwe have been unpredictable and financial development restricted by tightliquidity circumstances, constrained growth in government incomes against vastrecurring expenditure, and an extending current record deficiency because lowexports notwithstanding rising interest for imports and low capitalinflows(Climate Statement , 2014). Public finance stay under strain asgovernment business costs expend more than 70 percent of the budget (Climate Statement,2014).
The question is what has been the impact of the Zimbabwe Stock Exchangeas the economy underwent episodes of expansion and contraction. It isfor this reason that the study seeks to appraise whether the Zimbabwe stock exchangehas an impact on the economic growth patterns in Zimbabwe. In order to determine,whether the Zimbabwe stock exchange can be utilised as an instrument to enhanceeconomic growth in Zimbabwe. Research Objectives The chief objective of the study is to evaluate the impact of Stock Markets Development onEconomic Growth in Zimbabwe to attainthe ensuing objectives :× Toascertain whether a relationship exist between stock market and economic growthin Zimbabwe.× Toestablish the direction of causality between stock market and economic growthin Zimbabwe.Research Questions1.
What is the GDP growth rate pattern of Zimbabwe for the period 1993-2016?2. What has been the general trend ofthe Zimbabwe`s stock exchange performance over the period 1993 to 2016, in terms of thefollowing?· MarketCapitalisation· TotalValue of Shares Traded · Numberof Listed Companies 3. Does the Zimbabwe stock exchange have a significant relationship with GDP of Zimbabwe for the period 1993 to 2016 the followings ?· Market Capitalisation· Total Value Of Shares Traded· Number of Listed Companies Purpose Of The StudyThe purpose of this study isto evaluate the relationship between ZSE and economic growth in Zimbabwe for the period 1993to 2016 and analyses of the direction and strength of this relationship.
SSince 1996, Zimbabwe has beeninvolved in an inexorably serious monetary and political emergency and futureprospects are stressing (Organization for Economic Co-operation andDevelopment, 2002). The nation is confronting immense macroeconomic unevencharacters, in 2000 the monetary shortfall surpassed 20 for each dollar of GDPand expansion arrived at the midpoint of 56 for every dollar. Subsequently, thedevelopment rate is evaluated to have strongly diminished to – 5.
5 for every dollarin 2000 and – 6.6 for every dollar in 2001 (OECD, 2002). Following a time ofwithdrawal from 1998 to 2008, the economy recorded genuine development of over10% every year in the period 2010-13, preceding easing back to approximately 3%in 2014 (indexmundi, n.d.). In 2015 financial development eased back to 1.
5% withanticipated negative inflation in 2016 and 2017 (African Development Group,2017). The economy development of Zimbabwe have proceeded on unstable way notwithstandingthat Zimbabwe Stock Exchange is settled and mechanized. According to (Saungweme, 2013), Zimbabwean Stock Exchange is an distinctive rising stock market whoseexecution has been imperative in the previous two decades (Saungweme, 2013). Asresult, it is basic to investigate the connection between securities exchangeand financial development to define different means through which stockexchange can be utilized to animate economic development.Stock markets are prominent forplaying a very paramount role in boosting economic development throughenhancing efficacious mobilization of savings for investment as well as facilitatingcapital inflows (Jalloh, 2015). The link between financial stock market andeconomic development becomes the field of research more and more explored(Dehuan, 2010).
Luintel and Khan (1999) explored bi-directional causality testbetween financial development and economic development; they found that thefinancial stock market affects economic development (Dehuan, 2010). Levine& Zervos (1996), in their research on the relationship between the stockmarket development and economic development provided empirical evidence on themajor theoretical debates about the linkages between stock markets and long-runeconomic development utilizing data on 41 countries from 1976 to 1993(Dehuan,2010). It is commonly believed that astronomically immense decreases in stockprices are reflective of future recession, and incrementing stock prices areleading indicators of future economic development (Mun, Siong & Thing,2008). For instance, the dubiousness embedded in the recession of 2009triggered an immensely colossal-scale drop in stock prices that was reflectedin the Dow Jones and the S 500 (Fuentes, 2010).Levine and Zervos(1998) foundvigorous statistically consequential relationship between stock marketdevelopment and economic growth (Sajid , 2010).
Adajaski & Biekpe (2005)found a considerable positive impact of stock market development on economicmagnification in countries of upper middle-income economies (Sajid , 2010).Their findings were more reinforced by Bahadur and Neupane (2006), whoconcluded that stock markets fluctuations avail to soothsay the prospect growthof an economy ( Sajid , 2010).Husain (2006) calls attention tothat Japan has the most progressive securities exchange followed by East Asia,for example, China, Korea, Malaysia, Thailand, Singapore, Hong Kong,Philippines and Indonesia (Azam, 2016). As indicated by Ghosh and Revilla(2007), Asia’s securities exchanges have been vital wellspring of funding forthe region.
As indicated by Mauro (2000) Stock market is a stable foreordainingcomponent of financial development in rising economies (Boubakari, 2010).The fast extension of stock tradesin the African mainland has added to economic improvement in different routes,for example, encouraging long haul capital mobilization, the arrangement ofelective venture openings, pulling in foreign capital inflows and serving in asa flag of economic performance (Kumo, 2009). Yartey and Adjasi (2007)discovered that, securities exchanges add to financing of corporate venturesand subsequently development of listed firms in Africa as they are required tokeep best practices, at last prompting economic development. Well-workingsecurities exchanges, alongside all around composed establishments andadministrative frameworks will cultivate economic development (Osamwonyi,2013). Securities exchange improvement could well be a way to enable Africa toconquer the present development impasse caused by the global financial crisis(Massa, 2009).
Statementof the ProblemSince 1996, economic growth ofZimbabwe have been unpredictable and financial development restricted by tightliquidity circumstances, constrained growth in government incomes against vastrecurring expenditure, and an extending current record deficiency because lowexports notwithstanding rising interest for imports and low capitalinflows(Climate Statement , 2014). Public finance stay under strain asgovernment business costs expend more than 70 percent of the budget (Climate Statement,2014).The question is what has been the impact of the Zimbabwe Stock Exchangeas the economy underwent episodes of expansion and contraction. It isfor this reason that the study seeks to appraise whether the Zimbabwe stock exchangehas an impact on the economic growth patterns in Zimbabwe. In order to determine,whether the Zimbabwe stock exchange can be utilised as an instrument to enhanceeconomic growth in Zimbabwe. Research Objectives The chief objective of the study is to evaluate the impact of Stock Markets Development onEconomic Growth in Zimbabwe to attainthe ensuing objectives :× Toascertain whether a relationship exist between stock market and economic growthin Zimbabwe.
× Toestablish the direction of causality between stock market and economic growthin Zimbabwe.Research Questions1. What is the GDP growth rate pattern of Zimbabwe for the period 1993-2016?2. What has been the general trend ofthe Zimbabwe`s stock exchange performance over the period 1993 to 2016, in terms of thefollowing?· MarketCapitalisation· TotalValue of Shares Traded · Numberof Listed Companies 3. Does the Zimbabwe stock exchange have a significant relationship with GDP of Zimbabwe for the period 1993 to 2016 the followings ?· Market Capitalisation· Total Value Of Shares Traded· Number of Listed Companies Purpose Of The StudyThe purpose of this study isto evaluate the relationship between ZSE and economic growth in Zimbabwe for the period 1993to 2016 and analyses of the direction and strength of this relationship.
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