Thus, in open economic conditions the corruption control and stock market developing to economic growth has become a leading target for developing countries.. Therefore, the thesis inter
Trang 1
PHAM THI HONG VAN
SUMMARY OF PHD THESIS
Ho Chi Minh City –2020
MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS HO CHI MINH CITY
-
Trang 2MINISTRY OF EDUCATION AND TRAINNING
UNIVERSITY OF ECONOMICS HO CHI MINH CITY
-
PHAM THI HONG VAN
Major: Finance – Banking
Code: 9340201
SUMMARY OF PHD THESIS
SUPERVISOR:
Assoc Prof Dr Nguyen Hong Thang
Ho Chi Minh City –2020
Trang 3CHAPTER 1: GENNERAL INTRODUCTION
1.1 THE REASON FOR STUDY
Capital is one of the three main factors that make up the output value
of a country (Cobb-Douglas; Solow) The capital in the economy is supplied through the banking system (credit capital) and through the stock market (mainly equity) For economic growth, many countries have actively developed the stock market but the results are inconsistent (Arestis et al., 2001; djsi & Biekpe, 2006; Cooray, 2010; Bondoo, 2017; Durusu-Ciftci et al, 2017;…)
In developing countries, political institutions are more concentrated in the public sector, corruption is widespread and more common in developing countries than rich countries (Olken & Pande, 2012; Svensson, 2005; Treisman, 2000; Rauch & Evans, 2000) This affects development of stock market in particular and economic growth in general (Shabaz et al., 20113; Bolgorian, 2011; Yartey, 2010; Hooper
et al., 2009)
Thus, in open economic conditions the corruption control and stock market developing to economic growth has become a leading target for developing countries At the time of economic opening, the interaction between the public and private sector is increasingly strong In order to create a fair competitive environment and attact investment, the issue of corruption control is interested particularly by countries Thereby it affects to performance and quality of other relationships Therefore, the thesis interested in “Stock market development and economic growth: the role of trade openness and corruption control in developing countries”
1.2 OBJECTIVES:
The thesis solves three main objectives:
Trang 4(1) Estimate the role of trade openness on impact of stock market development to economic growth in developing countries
(2) Estimate the role of corruption control on the impact of stock market development to economic growth in developing countries (3) Estimate the role of corruption control on the impact of trade openness to economic growth in developing countries
1.3 OBJECT AND SCOPE OF THE RESEARCH
The object of the thesis is trade openness, stock market development, corruption control and economic growth in developing countries Scope of the thesis: The thesis identifies how to the impact of the development of the stock market on economic growth when there is the role of trade openness and corruption control in developing countries in the period of 2002 – 2017
1.4 RESEARCH METHOD
The thesis investigates the state of the development of stock market, trade openness, corruption control and economic growth in developing countries in the period of 2002 – 2017 to get overview of the changing trend of variables Next, the research conducted estimating the regression coefficient of the research model according to the objectives set out by the S-GMM method to thoroughly handle the endogenous phenomena of the model
1.5 STRUCTURE OF THE THESIS
The thesis has 5 chapters in structure An overview of the research is presented in 1st chapter Chapter 2 presents the theoretical framework and overview of the research situation Research methodology is presented in 3rd chapter The research results and discussion are presented in chaper 4 Finanlly, chapter 5 presents some conclusions and policy implications
Trang 5CHAPTER 2: THEORETICAL FRAMEWORK AND OVERVIEW OF RESEARCH SITUATION
2.1 CONCEPT FRAME
2.1.1 Economic growth (TTKT)
According to Kuznets (1959), “Economic growth is a sustained increase in per capita income or output per worker”; North and Thomas (1973) stated that “economic growth only occurs if output increases faster than the population”; or economic growth implies that the total income in the economic must increase faster than the population growth rate Economic growth must be associated with the increase in material living standards of the people (Nguyen Trong Hoai, 2007) Thus, the above economists all agree on an implication
of economic growth is the increase in output value in relation to population size
2.1.2 Stock market development (TTCK)
According to Bui Kim Yen (2013), the stock market is a part of the financial market performing the function of mobilizing investment capital for the economy Dao Le Minh (2006) said that the stock market was the general term for trading securities through different markets, such as centralized and decentralized markets In general, the stock market is the place where the buying and selling relationship occurs by brokers whose trading price are formed according to the law
of supply and demand
2.1.3 Trade openness (ĐMTM)
ĐMTM is a concept used to reflect a country’s level of international trade openness The level of international trade is reflected in the magnitude of the value of exported and imported goods and services
In this study, ĐMTM is understood as the level of goods exchange and
Trang 6trading across the border of a country, so it implies international trade The greater the trade openness, the greater the value of the country’s import-export good across its borders and vice versa
2.1.4 Corruption control (KSTN)
According to the World Bank’s measure of KSTN, implication of KSTN is understood to limit autocracy by promoting democracy at all levels, rectifying arbitrariness by developing processes in each stage
of dealing with work and dealing with violations, and increasing institutional transparency through laws, regulations, rules and office culture
2.2 SUMMARY OF RELATED RESEARCH
2.2.1 KSTN in the relationship between TTCK and economic growth in developing countries
According to Mankiw, Rome and Weil (1992), the performance factor
of aggregate factors (A) in Cobb - Douglass’s economic growth model reflects the relationship of many factors on business environment, institutional quality and technological advances Through the results
of the survey, combining growth model, corruption or corruption control can affect economic growth in two ways:
(1) is one of the factors that indirectly affect economic growth through the role of the performance of aggregate factor (A) in the growth model, such as the research of Anokhin and Schulze (2009); Acemoglu and Robinson (2008); Duncan (2014); Stefan
et al (2014);…
(2) or indirect effects throught relationships with other factors on economic growth, because there are also many studies that find the effect of KSTN to TTCK (Bolgorian, 2011; Shahbaz et al.,
Trang 72013; Kim et al., 2018), or impact between KSTN and ĐMTM (Majeed, 2014; Torrez, 2002)
The survey results show that the way (2) of KSTN on economic growth has not been discovered by studies, but only focused on the way (1) or exploring the impact of KSTN on TTCK or ĐMTM Therefore, the indirect impact of KSTN on economic growth through the relationship between TTCK (or ĐMTM) on economic growth is the research gap that the thesis is interested in
2.2.2 ĐMTM in the relationship between KSTN and economic growth in developing countries
Around the world, most countries are open for economic trade with each other Torrez (2002) found that ĐMTM increases competition, reduces corruption So restricting trade will increase corruption Levchenko (2013) points out that when two countries have the same technological level and the same economic level, when they open economic, each country must improve its institution in the direction of promoting economic growth, which implies that ĐMTM can reduce corruption
Meanwhile, De-Jong and Bogmans (2011) also assert that corruption hinders international trade by having to spend more bribes on customs
to be imported more Majeed (2014) also finds evidence that ĐMTM increases corruption by the privileges of state authorities in providing certificates of quality and origin of goods when goods put into circulation Mandal & Marjit (2013) studied in countries with low ĐMTM, which also implied many trade protection policies The results showed that corruption is associated with trade protectionism Therefore, Mandal & Marjit (2013) also suspect that trade liberalization is unlikely to reduce corruption
Trang 8Thus, corruption becomes common in developing countries while trade liberalization, how to impact on economic growth that is a matter
of concern to regulators Whether trade openness contributes to reducing corruption, contributing to economic growth for developing countries This is the fuzzy point of research (not consistent with experimental research results) that the thesis care
CHAPTER 3: MODELS AND RESEARCH METHODS
3.1 BUILDING RESEARCH HYPOTHESIS
From research objectives, the thesis formulated four research hypotheses
H1: There is an overwhelming effect of TTCK on the role of ĐMTM to economic growth in developing countries
H2: There is a dominant impact of KSTN on the impact of TTCK
to economic growth in developing countries
H3: ĐMTM increases corruption in developing countries
H4: There is an overwhelming impact of KSTN on the role of ĐMTM to economic growth in developing countries
Trang 9∆Lg(yit) = b0 + b1.Lg(yit-1) +b2.Lg(mcit) + b3.Lg(dcit) + b4.Lg(hit) + b5.(techit) + b6.(toit) + b7.(cc-levelit) + b8.(go-effit) + b9.(re-quait) +
b10.infit + b11.(cc-levelit).Lg(mcit) + υi +μit (3.12)
3.2.3 Corruption control and economic growth: role of trade openness
∆ Lg(yit) = c0 + c1.Lg(yt-1) +c2.Lg(mcit) + c3.Lg(dcit) + c4.Lg(hit) + c5.(techit) + c6.(toit) + c7.(cc-levelit) + c8.(go-effit) + c9.(re_quait) +
c10.infit + c11.(cc-levelit).(toit) + υi + μit (3.13)
3.3 MEASURE THE VARIABLE IN THE MODEL
The dependent variable is y it: GDP per capita, which represents the value of outphut per worker, used to measure economic growth according to the concept of economic growth Independent variables:
mcit: is ratio (%) of market capitalization to GDP, measure of stock market development; dcit: is the ratio (%) of credit to GDP, e measure
of the development of credit market; hit: is the variable of human capital, measured by human development index; ccit: is a variable of corruption control; toit: is the trade openness variable determined by the ratio of the value of import and export goods to GDP; techit: reflecs general technological factors of the economy; intit: inflation ratio measured by the consumer price index provided; go-effit: is an indicator of government effectiveness; re-quait: is an indicator of law quality
3.4 SAMPLE AND RESEARCH DATA
The sample includes developing countries according to the classification of the International Monetary Fund (IMF) published in April 2015 that have active stock market The research data is a panel data set of 36 developing countries for period of 16 years (2002 – 2017) These indicators include most of the development index and
Trang 10governance index It extracted from the WB (updated January 30 th, 2019)
3.5 METHOD OF ESTIMATION
3.5.1 Select estimation method
According to econometric theory (Anderson và Hsiao, 1981; Wooldridge, 2012), when the independent variable (a one-time lag variable with the dependent variable) correlates with the uit error, this variable causes endogenous phenomena of the model The research data sample of the thesis has a time study period (N=16) is shorter than the number of countries (N=36), so it is suitable for using the S-GMM (Blundell và Bond, 1998) on dynamic panel Therefore, the thesis chooses the S-GMM estimation method to estimate the research model
3.6 ROBUSTNESS TEST OF RESEARCH MODEL
The study compares the results of estimating the impact of KSTN on the impact of TTCK on economic growth in two cases of corruption scales of the WB and TI The thesis tests robustness of the model through the method of comparing the sign stability of the main variables through three research models (3.11), (3.12) and (3.13) If the impact of the main independent variables on the dependent variable is constant, the impact is consistent (stability) and robustness Therefore, the estimation results on the direction of the impact of these variable to the dependent variable are reliable (effectiveness)
4.1 ĐMTM, TTCK, KSTN AND ECONOMIC GROWTH
4.1.1 Regression on the impact of ĐMTM, TTCK and KSTN to economic growth
Trang 11Relationship between ĐMTM (to), TTCK (lg-mc), KSTN (cc) and economic growth d (Lgy) according to the theoretical model (3.9) and the empirical model (3.10) is shown by the regression results in table (4.4) The main variables of the thesis of interest are highlighted in the results
Table 4.4: Regression on the impact of ĐMTM, TTCK and
KSTN to economic growth Dependent variable
d.lgy
M1 (3.9)
M2 (3.10)
(0,008)
-0,001 (0,006)
(0,018)
-0,018 (0,024)
(0,018)
-0,001 (0,013)
Trang 12*, **, ***, denote statistical significance at the 10%, 5% and 1%
level, respectively; value in brackets are standard errors
One-period lag of the dependent variable (l.lgy) has negative regression coefficients and is statistically significant in both research results showing signs of convergence of economic growth in developing countries This is consistent with the analysis of Solow (1956), Barro et al (1991), Tondl (2001) TTCK variable have a negative impact on economic growth while credit market variables have positive effects on growth, similar to the research results of Rioja and Valev (2014), Naceur and Ghazouani (2007) This is consistent with the law of trade-off following the approach of Durusu-Ciftci et
al (2017)
The regression coefficient of the ĐMTM (to) positively affects economic growth, consistent with the theoretical argument and literature review (Musila & Yiheyis, 2015; Shahbaz, 2012; Chandran
& Munusamy 2009) In addition, the KSTN (cc) is statistically significant and positive, suggesting that the KSTN effect promoting economic growth is similar to the results of Cieślik and Goczek
Trang 13(2018), Chang and Hao (2017), Mallik and Saha (2016) claim that corruption impedes economic growth ĐMTM (to), TTCK (lg-mc), and KSTN (cc) in the model of determining economic growth according to the theoretical model (3.9) or the experimental model (3.10) impact constantly on economic growth They proved that their impact on growth is stable
4.2 TTCK AND ECONOMIC GROWTH: ROLE OF ĐMTM 4.2.1 Experimental research results
Table 4.5: Regreeion results of model (3.11)
Dependent variable
d.lgy
M3 (3.10*)
M4 (3.11)
(0,007)
0,0003 (0,007)