Empirical determinants of the relationships between capital market development and economic growth

In this article, a comprehensive review of empirical studies exploring the relationship between capital market development and economic growth is presented. The analysis includes a detailed examination of four theoretical approaches: causal independence, demand-following, supply-leading, and feedback loop hypotheses. Utilizing diverse econometric methods and data from various countries, the findings highlight the complexity and variability of the relationship, influenced by measurement methodologies and specific economic contexts. This study underscores the importance of capital market indicators and their differentiated impacts on economic growth, depending on the structure of the banking and stock market sectors. The results contribute to the understanding of how capital market development interacts with economic growth, offering valuable insights for both developed and developing economies. The article also emphasizes the necessity for further research that incorporates global trends, regulatory environments, and institutional frameworks to deepen our understanding of these relationships.