Study Of Economic Development Of Pakistan Through Stock Market

Master's Thesis from the year 2007 in the subject Economics - Finance, , course: Masters of Philosophy (M.Phil.), language: English, abstract: The purpose of the research is to examine the causal relationship between stock prices and the variables representing the real sector of the economy like read GDP, and real investment spending, in Pakistan. Researcher has used annual data from December 1980 to June 2007, to examine the stochastic properties of the variables, and has taken care of the expected shift in the series due to the start of the liberalization program in the early 1990s. State Bank General Price Index (SBGPI) with base 1980-81 is used for stock prices whereas for real variables GDP, and investment, at constant prices of 1980-81 were used. The descriptive statistics indicate a much higher expansion in stock prices relative to real variables. However, the stock prices also experienced much higher volatility during the sample period whereas the real variables seem to be stable. The correlation analysis shows low correlations between stock prices and real variables. However, there is evidence of significant increase in these correlations in the post reform period suggesting that these reforms resulted in significant improvement in the behavior of stock market and its linkages to the economy. In the formal investigation, the co-integration regressions indicate the presence of a long run relationship between stock prices and real variables. Regarding the cause and effect relationship the error correction model suggest a unidirectional causality from the real variables to stock prices implying that in Pakistan fluctuations in real sector cause changes in stock prices. The analysis does not verify the evidence of improvement in the linkages of stock market to the economy, which is indicated by the correlation analysis. These results have not changed by the incorporation of the expected shift in the variables resulting from the liberalization measures. The findings suggest that the stock market in Pakistan is still not that developed to play its due role in influencing the real sector of the economy. It can be implied, however, that the government can use the real sector to influence the stock market. An important implication of the findings is that the stock market in Pakistan cannot be characterized as the leading indicator of the economic activity. The study clearly indicates that it lags economic activity. It seems that the phenomenal growth in stock market variables like market capitalization, trading volume, the market index, etc. do not seem to influence the economy of Pakistan.

Study of economic development in Pakistan during the period from 1947 to 1965 - covers political and social structures of the country, agriculture, natural resources, industry, the balance of payments, national planning methodology and implementation of plans, investment policy, regional planning, etc. Statistical tables, and bibliography pp. 163 to 167.

Academic Paper from the year 2019 in the subject Business economics - Investment and Finance, grade: 95.0, GC University, language: English, abstract: This empirical study was conducted to find the impact of IMF credit on the economy of Pakistan. Amid of 2018, Pakistan, being a developing nation is facing the critical situation for which it is left with no option other than knocking the door of IMF for borrowing credit in order to reform the up speculated economic crises. However, the studies have shown the controversial effects of IMF credit and its programs on the economies. Many critics believed that the programs of IMF exert significant effects on the economy, though this study was conducted to find the impact of IMF credit programs on the economy of Pakistan. The results depicted that the acceptance of the null hypothesis and rejection of the alternative hypothesis. Thus, the finding is that there is no impact of IMF credit programs on economic growth (GDP) of Pakistan since 1971. This proves that Pakistan can invest their borrowed loan in profitable projects to prosper the economic growth. Pakistan, being a developing nation is facing the critical situation for which it is left with no option other than knocking the door of IMF for borrowing credit in order to reform the up speculated economic crises. Before approving the loan the government of Pakistan must convince the IMF for less harsh conditionality against the additional fund than its quota. However, it would be a challenging task to reach IMF to demand 300% more than its quota. So, it is significant to know that whether the government is consuming that loan in fruitful projects so that enough turnover would generate from the economy to pay back the acquired loan. Unfortunately, despite of the global growth objective of IMF, around 11 major conditions imposed by IMF including: excise duty on service as well as agricultural sector, less expenditure in development programs of public sectors, currency devaluation, ceasing gas and electricity subsidy, uniformity in the rates of dollar exchange rate and interbank, ceasing of financial intervention in stock market of Pakistan, raise markup rate on bank and bank transactions, ceasing of non- development expenditure under budget of defense, non-allowance of supplementary grants to the government sectors, reduction in the non-developing expenses of ministries.

May 1995 The three most developed stock markets are in Japan, the United Kingdom, and the United States, and the most underdeveloped markets are in Colombia, Nigeria, Venezuela, and Zimbabwe. Markets tend to be more developed in richer countries, but some markets commonly labeled emerging (for example, in Malaysia, the Republic of Korea, and Thailand) are systematically more developed than some markets commonly labeled developed (for example, in Australia, Canada, and many European countries). World stock markets are booming. Between 1982 and 1993, stock market capitalization grew from $2 trillion to $10 trillion, an average 15 percent a year. A disproportionate amount of this growth was in emerging stock markets, which rose from 3 percent of world stock market capitalization to 14 percent in the same period. Yet there is little empirical evidence about how important stock markets are to long-term economic development. Economists have neither a common concept nor a common measure of stock market development, so we know little about how stock market development affects the rest of the financial system or how corporations finance themselves. Demirgüç-Kunt and Levine collected and compared many different indicators of stock market development using data on 41 countries from 1986 to 1993. Each indicator has statistical and conceptual shortcomings, so they used different measures of stock market size, liquidity, concentration, and volatility, of institutional development, and of international integration. Their goal: to summarize information about a variety of indicators for stock market development, in order to facilitate research into the links between stock markets, economic development, and corporate financing decisions. They highlight certain important correlations: * In the 41 countries they studied, there are enormous cross-country differences in the level of stock market development for each indicator. The ratio of market capitalization to GDP, for example, is greater than 1 in five countries and less than 0.10 in five others. * There are intuitively appealing correlations among indicators. For example, big markets tend to be less volatile, more liquid, and less concentrated in a few stocks. Internationally integrated markets tend to be less volatile. And institutionally developed markets tend to be large and liquid. * The three most developed markets are in Japan, the United Kingdom, and the United States. The most underdeveloped markets are in Colombia, Nigeria, Venezuela, and Zimbabwe. Malaysia, the Republic of Korea, and Switzerland seem to have highly developed stock markets, whereas Argentina, Greece, Pakistan, and Turkey have underdeveloped markets. Markets tend to be more developed in richer countries, but many markets commonly labeled emerging (for example, in Korea, Malaysia, and Thailand) are systematically more developed than markets commonly labeled developed (for example, in Australia, Canada, and many European countries). * Between 1986 and 1993, some markets developed rapidly in size, liquidity, and international integration. Indonesia, Portugal, Turkey, and Venezuela experienced explosive development, for example. Case studies on the reasons for (and economic consequences of) this rapid development could yield valuable insights. * The level of stock market development is highly correlated with the development of banks, nonbank financial institutions (finance companies, mutual funds, brokerage houses), insurance companies, and private pension funds. This paper -- a product of the Finance and Private Sector Development Division, Policy Research Department -- is part of a larger effort in the department to study stock market development. The study was funded by the Bank's Research Support Budget under the research project Stock Market Development and Financial Intermediary Growth (RPO 678-37).

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