The Impact of the Local Financial Market on Economic Growth: the case of Kazakhstan
This study investigates the possible relationship between the local financial market and economic growth in a time series environment for Kazakhstan by using data covering the period since independence from 1994 to 2017. To assess the relationship between economic growth and both banking development and the stock market, we used: (1) measures of economic growth and its components; (2) a measure of banking development, (3) empirical indicators of stock market size, liquidity, volatility, and (4) control variables as determinants of Kazakhstan's economy growth. Several econometric techniques were used to study stationarity of time series and then regression analysis and the Granger causality test has been done. The results of the study led to the conclusion that at this stage of economic development of Kazakhstan, its economic growth, based on oil extraction and investment, is a catalyst for the development of the financial sector. Thus, we have confirmed the advantage of the demand hypothesis for the economy of Kazakhstan, the future development of which is significantly dependent on Green Financial System. This study investigates the possible relationship between the local financial market and economic growth in a time series environment for Kazakhstan by using data covering the period since independence between 1994 and 2017. The dataset is generated from the World Development Indicators Database of the World Bank (WB 2019) and World Economic Outlook Database of the International Monetary Fund (IMF 2019). It must be pointed out that the dataset was unbalanced. To avoid econometric estimation errors that may arise, most of the variables in the series are transformed through the diagnostic techniques.