Stock market, tax revenue and economic growth: a case-study of developing Asia

The purpose of this paper is to establish the plausibility of stock market and taxation revenue as a tool to boost economic growth using time series data of ten developing Asia countries over the period of 1990 to 2008. We conducted a stationary test of the variables, followed by cointegration analysis and multivariate Granger causality. This study reveals that, in the case of China, we find strong evidence in support of the relationship between each of the examined variables. There is however mix findings for others countries. This paper is only preliminary analysis. The number of countries to represent the developing Asia is very limited. The paper is the first to examine such relationship especially within the developing context. This paper contributes to the literature by offering a holistic view of the role of government revenue and stock market as they pertain to economic growth. The results are significant for investors, the authority and the policymakers