IMPACT OF PAKISTAN STOCK MARKET PERFORMANCE ON THE GROWTH OF PAKISTAN'S ECONOMY

Abstract

Important recent investigations have already made significant progress in establishing a relationship increasing per capita income is seen to be a relationship between the stock market and the rate of economic growth development might impact various elements of the economy, including stock market performance. Financial progress, according to many academics, is a better indicator of actual income and wealth. This project is about the stock market and its impact on economy growth. The need for this project is to find out whether GDP is affected by stock market or not. This project will be a guide to those who invests in stock market. In our project, we have first extracted data from stock market. From there we were able to extract daily turnover ofstocks. After that we have considered market capitalization for the selected company on which we had worked on. Afterwards, we found GDP of a particular sector we were working on. Then we compared our independent variables with dependent variables to complete our project. In this case our independent variables were market capitalization, stock turnover and turnover value. Our dependent variable was gross domestic product. We have also performed Panel Least Squared method (PLS), fixed effect model (FEM) and random effect model (REM) to check our results. From our data we can conclude that our independent variables are linked to dependent variable. We can also conclude that these four variables are directly proportional to each other. Meaning that change in all three independent variables is directly linked with the dependent variable. If there is an increase or decrease in one variable, the other variable effects in the same way. Also, from our tests it has been concluded that market capitalization has a negative impact on the GDP while stock turnover and turnover value have a favorable economic impact on gross domestic product. As a result, stock market success can contribute to economic growth.