CONTRIBUTION OF STOCK MARKET DEVELOPMENT ON ECONOMIC GROWTH OF NEPAL

Abstract

The primary aim of the research was to examine the role that stock market development factors play in the expansion of Nepal's economy. Economic growth is the study's dependent variable, and the study's independent variables are Stock Turnover Value, Market Capitalization, NEPSE Index, Digitalization, and Broad Money Supply. Various research designs, including descriptive, correlational, and analytical research, were employed to conduct the study. The study used a test of causality to examine whether there was a relationship between the rise of Nepal's stock market and the nation's overall economic growth over a ten-year period, from 2013 to 2023.Purposive sampling design has been used in the study since the researcher is about to analyze the impact of stock market development on economic growth of Nepal. The population of the study is the NEPSE index, and the sample is companies whose shares are traded on the NEPSE floor. This investigation used only secondary data. The study findings has found that digitalization of stock market (p =0.000) has been the most influential factor that has influenced economic growth of Nepal. The introduction of Meroshare and TMS by the broker house has led to rise in the Share market recently. In the same way market capitalization (p = 0.018) and Nepse index (p = 0.025) has shown significant relation with the economic growth of Nepal. Contrary, stock turnover (p = 0.278) and money supply (p = 0.164) has shown insignificant relationship with the economic growth of Nepal. Through the lens of Correlation test all the factors are positively associated with the economic growth. Digitalization of share market has found to be strongly correlated with economic growth followed by market supply, market capitalization, Nepse index and stock turnover value. The study is important because it will help investors, the government, and other stakeholders make decisions about policy and forecasts about the economy and stock market based on the variables that are being studied. The study can be beneficial to understand the role of agency that are associated with the stock market and capital market as a whole.