Financial Intermediation and Stock Market Activity Growth: A Causality- Co-Integration Approach


  • Dr. Manoj S. Kamat Department of Commerce VVM’s Shree Damodar College of Commerce and Economics, Margao-Goa, India.
  • Dr Manasvi Department of Economics VVM’s Shree Damodar College of Commerce and Economics, Margao-Goa, India.


Stock Market, Growth, Investor, Financial Innovations, Infrastructure Development, Causality, Cointegration, VAR, VECM, India


The nexus between stock market growth and its intermediary developments with the economic activity for India is investigated over the post-liberalization period ranging 1993-2011. Using Unrestricted Vector Auto Regression (VAR) based on Error Correction Models (ECM). Both in the short term and the long term models we illustrate the short run relationship of the time-series properties relating stock market development and the intermediation growth relations. The coherent picture which emerges from Granger-causality test based on Vector Error Correction Model (VECM) reveals that in the long run, stock market development Granger-causes financial infrastructural growth. Our findings suggest that the evolution of the stock market tends to, or is more likely to stimulate and promote economic growth when monetary authorities adopt liberalized investment and openness policies, improve the size of the market and the de-regulate the stock market. The capital market intermediation development indicators have a highly positive causation coefficient with the capital market economic activity implying that they have developed together in the Indian economy.



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How to Cite

Dr. Manoj S. Kamat, & Dr Manasvi. (2021). Financial Intermediation and Stock Market Activity Growth: A Causality- Co-Integration Approach. Indian Journal of Commerce and Management Studies, 6(2), 1–10. Retrieved from