Stock Market and Shareholder Protection: Are They Important for Economic Growth?

This paper tries to determine the long run equilibrium relationship between shareholder protection and stock market development and ultimately their relationship with economic growth in the context of India. A number of causality tests are employed to investigate the long run causal relationship in a system consisting of stock market development, legal development and economic growth. While developments in procedural law and investor protection cause market capitalization, the relationship between stock market and economic growth is ambiguous as the relationship is not consistent for different indicators of stock market development which is contrary to most of the existing literature.