Stock Market, Financial Development, and Growth in Southeast Asia ...

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Financial System

Functions 1. Facilitate exchange of goods and services 2. Facilitate risk management 3. Mobilize and pool resources 4. Collect and evaluate information to allocate capital Channels 1. Rate of physical capital accumulation 2. Productivity and efficiency of factors of production to make goods and services

Rate and level of economic growth

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m γ= γ¯ (1 − τ ) − ν λ γ m ν

1 m σ − 1 + + γ¯ (1 − τ ) λ λ γ¯ τ

λ σ

ν

σ

...

...

"# !

γ¯

τ

"

Yit =β0 + β1 Pit + β2 LIit + β3 Xit + β4 IN Fit + β5 GCit + β6 F Dit + β7 ST Kit + 'it i

t

Y

P

LI X IN F GC FD

ST K

'

Y P I X PC LY ST K IN F GC

0.0501 0.0189 0.2775 0.0862 0.5980 0.6668 0.5650 0.0729 −2.3732

0.0416 0.0062 0.1089 0.1095 0.3999 0.3449 0.5972 0.0936 0.2358

−0.1313 0.0056 0.1435 −0.3181 0.0805 0.1425 0.0006 −0.0864 −2.7532

0.1329 0.0297 0.6148 0.3981 1.6596 1.3233 2.8243 0.7527 −1.8394

Y P I X PC LY ST K IN F GC

0.0313 0.0178 0.2185 0.0459 0.2901 0.3316 0.3242 0.2483 −2.0283

0.0507 0.0052 0.0599 0.1155 0.1904 0.1250 0.3610 0.2607 0.2041

−0.1032 0.0097 0.0963 −0.1972 0.0642 0.1214 0.0149 0.0024 −2.3975

0.1229 0.032 0.4201 0.6963 0.7825 0.6944 1.4715 1.4100 −1.4687

P C1 P C1 LLY LP C LST K

P C2

0.504021 0.651909 0.566549

0.785542 −0.073347 −0.614446

P C1 LLY LP C LST K

P C2

0.7576 P C3

0.6296 0.6145 −0.4754

0.2789 0.3923 0.8765

0.7251 −0.6845 0.0756

P C1

P C2

0.8168 P C3

0.6268 0.5557 0.5462

−0.0255 −0.6860 0.7272

−0.7787 0.4698 0.4158

P C1

P C2

0.8907 P C3

0.5784 0.5836 0.5700

−0.5378 −0.2525 0.8044

0.6134 −0.7718 0.1678

P C1

P C2

0.7686 P C3

0.5713 0.6389 0.5153

−0.6030 −0.0993 0.7916

0.5569 −0.7629 0.3285

P C1

P C2

0.8393 P C3

0.5300 0.6099 0.5892

0.8351 −0.2550 −0.4874

P C1 LLY LP C LST K

P C1 LLY LP C LST K

P C1 LLY LP C LST K

P C1 LLY LP C LST K

0.359008 −0.754742 0.549070

P C1

P C1 LLY LP C LST K

0.6896 P C3

P C1

P C2

0.4646 0.6434 0.6085

0.8705 −0.2056 −0.4472

0.1470 −0.7504 0.6445 0.7304 P C3 0.1626 −0.7374 0.6555

0 

0.5 

1 

1.5 

2 

0 

0.2 

0.4 

0.6 

0.8 

1 

1.2 

Chile 

Venezuela 

Thailand 

Indonesia 

Malaysia 

Philippines 

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 

Southeast Asia: Financial Development

Mexico 

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 

Latin America: Financial Development 2 

0 

0.5 

1 

1.5 

2 

2.5 

3 

0 

0.5 

1 

1.5 

Chile 

Venezuela 

Thailand 

Indonesia 

Malaysia 

Philippines 

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 

Southeast Asia: Stock Market Capitalization

Mexico 

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 

Latin America: Stock Market Capitalization

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...

Yit = g(Xit ) + uit ,

i = 1, 2, . . . , N, t = 1, 2, . . . , T

g(·)

Xit = (Xit , . . . , Xit,q ) E(uit |Xi1 , . . . , XiT ) =

q 0 i

t

E(Yit |Zit , δi ) k(x) = 1

ˆ=1 λ Zit

ˆ=0 λ

$√

ˆ : λ

x2

2πe− 2 δi ˆ < 1 0 < λ

FD P LI X FD IN F GC

33823.79 0.8298269 0.2795014 0.3699097 0.506184 0.106356 1 0.1356437

9933493 6.535436 5.422761 1.826313 8.721854 0.6471617 1 1 FD

P LI X FD IN F GC

38795.74 3010390 0.2432389 713987.4 3168052 0.1068184 0.9999147 0.123883

16257790 21014425 4.335998 7413662 29162852 1.114888 1 1 FD

P LI X FD IN F GC

0.00574642 0.5896952 214708.2 0.3202228 0.03682356 408151.5 1 1

1.495618 3.599081 3991106 1.268968 1.336044 2793695 1 1 ST K

P LI X ST K IN F GC

9642.512 520983.5 0.2432478 2842626 5204622 0.1067935 1 0.1237841

4040802 3636794 4.336156 29516303 47910078 1.114627 1 1 ST K

P LI X ST K IN F GC

0.00387736 80416.95 30228.74 0.4159366 0.04463931 4916623 1 0.8554529

1.009159 490808.1 561907.3 1.422713 1.619617 33653064

ˆ