STOCK MARKET BEHABIOUR AND ECONOMIC GROWTH: NEPALESE EVIDENCE

Abstract

The objective of the study is to analyze the stock market behavior and economic growth of Nepal for the period of 20 years from 2003/04 to 2022/23. This study used descriptive and casual research design to deal with the fundamental issues associated with stock market and economic growth of Nepal. This study has considered gross domestic product and gross national income as the proxies to economic growth and are used as dependent variables. The independent variables used in this study are market capitalization, NEPSE Index and concentration ratio. The regression model is estimated to test the impact and significance of the development of stock market on economic growth of Nepal. This study concludes the market capitalization and the NEPSE Index shows a positive relation with GDP and GNI that significantly influence the economic growth of Nepal. Likewise, Concentration Ratio shows negative relation with GDP and GNI that significantly influence the economic growth of Nepal. The findings of this study provide important policy implications for the Nepalese government and regulators in their effort to stock market development and economic growth in the country.