Since easing back to approximately 3% in

Since 1996, Zimbabwe has been
involved in an inexorably serious monetary and political emergency and future
prospects are stressing (Organization for Economic Co-operation and
Development, 2002). The nation is confronting immense macroeconomic uneven
characters, in 2000 the monetary shortfall surpassed 20 for each dollar of GDP
and expansion arrived at the midpoint of 56 for every dollar. Subsequently, the
development rate is evaluated to have strongly diminished to – 5.5 for every dollar
in 2000 and – 6.6 for every dollar in 2001 (OECD, 2002). Following a time of
withdrawal from 1998 to 2008, the economy recorded genuine development of over
10% 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% with
anticipated negative inflation in 2016 and 2017 (African Development Group,
2017). The economy development of Zimbabwe have proceeded on unstable way notwithstanding
that Zimbabwe Stock Exchange is settled and mechanized. According to (Saungweme
, 2013), Zimbabwean Stock Exchange is an distinctive rising stock market whose
execution has been imperative in the previous two decades (Saungweme, 2013). As
result, it is basic to investigate the connection between securities exchange
and financial development to define different means through which stock
exchange can be utilized to animate economic development.

Stock markets are prominent for
playing a very paramount role in boosting economic development through
enhancing efficacious mobilization of savings for investment as well as facilitating
capital inflows (Jalloh, 2015). The link between financial stock market and
economic development becomes the field of research more and more explored
(Dehuan, 2010). Luintel and Khan (1999) explored bi-directional causality test
between financial development and economic development; they found that the
financial stock market affects economic development (Dehuan, 2010). Levine
& Zervos (1996), in their research on the relationship between the stock
market development and economic development provided empirical evidence on the
major theoretical debates about the linkages between stock markets and long-run
economic development utilizing data on 41 countries from 1976 to 1993(Dehuan,
2010). It is commonly believed that astronomically immense decreases in stock
prices are reflective of future recession, and incrementing stock prices are
leading indicators of future economic development (Mun, Siong & Thing,
2008). For instance, the dubiousness embedded in the recession of 2009
triggered an immensely colossal-scale drop in stock prices that was reflected
in the Dow Jones and the S&P 500 (Fuentes, 2010).

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Levine and Zervos(1998) found
vigorous statistically consequential relationship between stock market
development and economic growth (Sajid , 2010).Adajaski & Biekpe (2005)
found a considerable positive impact of stock market development on economic
magnification in countries of upper middle-income economies (Sajid , 2010).
Their findings were more reinforced by Bahadur and Neupane (2006), who
concluded that stock markets fluctuations avail to soothsay the prospect growth
of an economy ( Sajid , 2010).

Husain (2006) calls attention to
that 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 for
the region. As indicated by Mauro (2000) Stock market is a stable foreordaining
component of financial development in rising economies (Boubakari, 2010).

The fast extension of stock trades
in the African mainland has added to economic improvement in different routes,
for example, encouraging long haul capital mobilization, the arrangement of
elective venture openings, pulling in foreign capital inflows and serving in as
a flag of economic performance (Kumo, 2009). Yartey and Adjasi (2007)
discovered that, securities exchanges add to financing of corporate ventures
and subsequently development of listed firms in Africa as they are required to
keep best practices, at last prompting economic development. Well-working
securities exchanges, alongside all around composed establishments and
administrative frameworks will cultivate economic development (Osamwonyi,
2013). Securities exchange improvement could well be a way to enable Africa to
conquer the present development impasse caused by the global financial crisis
(Massa, 2009).

Statement
of the Problem

Since 1996, economic growth of
Zimbabwe have been unpredictable and financial development restricted by tight
liquidity circumstances, constrained growth in government incomes against vast
recurring expenditure, and an extending current record deficiency because low
exports notwithstanding rising interest for imports and low capital
inflows(Climate Statement , 2014). Public finance stay under strain as
government 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 Exchange
as the economy   underwent   episodes of expansion and contraction. It is
for this reason that the study seeks to appraise whether the Zimbabwe stock exchange
has 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 enhance
economic growth in Zimbabwe.

 

 

Research Objectives

The chief  objective 
of the study is to evaluate the impact of Stock Markets Development on
Economic Growth in Zimbabwe to  attain
the  ensuing objectives :

×         
To
ascertain whether a relationship exist between stock market and economic growth
in Zimbabwe.

×         
To
establish the direction of causality between stock market and economic growth
in Zimbabwe.

Research Questions

1.     
What   is the GDP growth rate pattern of Zimbabwe for the period 1993-2016?

2.      What has been the general trend of
the Zimbabwe`s stock exchange performance over   the period 1993 to 2016, in terms of the
following?

·        
Market
Capitalisation

·        
Total
Value of Shares Traded

·        
Number
of 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 Study

The purpose of this study is
to evaluate the  relationship  between  ZSE
 and  economic growth in Zimbabwe for the period 1993
to 2016 and analyses of the direction and strength of this relationship.

SSince 1996, Zimbabwe has been
involved in an inexorably serious monetary and political emergency and future
prospects are stressing (Organization for Economic Co-operation and
Development, 2002). The nation is confronting immense macroeconomic uneven
characters, in 2000 the monetary shortfall surpassed 20 for each dollar of GDP
and expansion arrived at the midpoint of 56 for every dollar. Subsequently, the
development rate is evaluated to have strongly diminished to – 5.5 for every dollar
in 2000 and – 6.6 for every dollar in 2001 (OECD, 2002). Following a time of
withdrawal from 1998 to 2008, the economy recorded genuine development of over
10% 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% with
anticipated negative inflation in 2016 and 2017 (African Development Group,
2017). The economy development of Zimbabwe have proceeded on unstable way notwithstanding
that Zimbabwe Stock Exchange is settled and mechanized. According to (Saungweme
, 2013), Zimbabwean Stock Exchange is an distinctive rising stock market whose
execution has been imperative in the previous two decades (Saungweme, 2013). As
result, it is basic to investigate the connection between securities exchange
and financial development to define different means through which stock
exchange can be utilized to animate economic development.

Stock markets are prominent for
playing a very paramount role in boosting economic development through
enhancing efficacious mobilization of savings for investment as well as facilitating
capital inflows (Jalloh, 2015). The link between financial stock market and
economic development becomes the field of research more and more explored
(Dehuan, 2010). Luintel and Khan (1999) explored bi-directional causality test
between financial development and economic development; they found that the
financial stock market affects economic development (Dehuan, 2010). Levine
& Zervos (1996), in their research on the relationship between the stock
market development and economic development provided empirical evidence on the
major theoretical debates about the linkages between stock markets and long-run
economic development utilizing data on 41 countries from 1976 to 1993(Dehuan,
2010). It is commonly believed that astronomically immense decreases in stock
prices are reflective of future recession, and incrementing stock prices are
leading indicators of future economic development (Mun, Siong & Thing,
2008). For instance, the dubiousness embedded in the recession of 2009
triggered an immensely colossal-scale drop in stock prices that was reflected
in the Dow Jones and the S 500 (Fuentes, 2010).

Levine and Zervos(1998) found
vigorous statistically consequential relationship between stock market
development and economic growth (Sajid , 2010).Adajaski & Biekpe (2005)
found a considerable positive impact of stock market development on economic
magnification in countries of upper middle-income economies (Sajid , 2010).
Their findings were more reinforced by Bahadur and Neupane (2006), who
concluded that stock markets fluctuations avail to soothsay the prospect growth
of an economy ( Sajid , 2010).

Husain (2006) calls attention to
that 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 for
the region. As indicated by Mauro (2000) Stock market is a stable foreordaining
component of financial development in rising economies (Boubakari, 2010).

The fast extension of stock trades
in the African mainland has added to economic improvement in different routes,
for example, encouraging long haul capital mobilization, the arrangement of
elective venture openings, pulling in foreign capital inflows and serving in as
a flag of economic performance (Kumo, 2009). Yartey and Adjasi (2007)
discovered that, securities exchanges add to financing of corporate ventures
and subsequently development of listed firms in Africa as they are required to
keep best practices, at last prompting economic development. Well-working
securities exchanges, alongside all around composed establishments and
administrative frameworks will cultivate economic development (Osamwonyi,
2013). Securities exchange improvement could well be a way to enable Africa to
conquer the present development impasse caused by the global financial crisis
(Massa, 2009).

Statement
of the Problem

Since 1996, economic growth of
Zimbabwe have been unpredictable and financial development restricted by tight
liquidity circumstances, constrained growth in government incomes against vast
recurring expenditure, and an extending current record deficiency because low
exports notwithstanding rising interest for imports and low capital
inflows(Climate Statement , 2014). Public finance stay under strain as
government 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 Exchange
as the economy   underwent   episodes of expansion and contraction. It is
for this reason that the study seeks to appraise whether the Zimbabwe stock exchange
has 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 enhance
economic growth in Zimbabwe.

 

 

Research Objectives

The chief  objective 
of the study is to evaluate the impact of Stock Markets Development on
Economic Growth in Zimbabwe to  attain
the  ensuing objectives :

×         
To
ascertain whether a relationship exist between stock market and economic growth
in Zimbabwe.

×         
To
establish the direction of causality between stock market and economic growth
in Zimbabwe.

Research Questions

1.     
What   is the GDP growth rate pattern of Zimbabwe for the period 1993-2016?

2.      What has been the general trend of
the Zimbabwe`s stock exchange performance over   the period 1993 to 2016, in terms of the
following?

·        
Market
Capitalisation

·        
Total
Value of Shares Traded

·        
Number
of 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 Study

The purpose of this study is
to evaluate the  relationship  between  ZSE
 and  economic growth in Zimbabwe for the period 1993
to 2016 and analyses of the direction and strength of this relationship.

S