An Analysis of the Stock Market's Impact on Economic Growth: Insights from an Indian Context

This research paper investigates the causal link between economic growth and stock market development in India, covering the period from 2003 to 2017. Economic growth is measured using the GDP growth rate, while stock market development is assessed through the Market Capitalization Ratio. The analysis employs a Vector Auto Regression (VAR) framework to explore the causal relationship. The findings indicate a robust connection between economic growth and stock market development. The study provides substantial evidence that the stock market positively influences economic growth, as demonstrated by the positive effects of the market capitalization to GDP ratio and the volume of stocks traded on the country's GDP.