The determinants of Malaysian stock market development

Stock market allows investors to contribute funds to the companies for their operation and
development. Thus, the development of stock market is very important for every country because a well-developed stock market provides an effective risk diversification, enhances information disclosure of the companies and increases the corporate governance practice. The objectives of this study are to determine the effect of bank development, economic growth, inflation and saving rate on stock market development in Malaysia for the duration of 13 years (2004 to 2016). The dependent variable is the stock market development meanwhile the independent variables are bank development, economic growth, inflation and saving rate. This study finds that economic growth and saving rate have significantly enhanced the stock market development in Malaysia. On the other hand, inflation has found to significantly reduce the stock market development. However, bank development shows an insignificant impact towards stock market development. Therefore, the findings indicate that, economic growth, inflation and saving rate have a major influence on the Malaysian stock market development. Thus, the policies and regulations targeted at improving those variables could have a significant impact in promoting the stock market development.