FINANCIAL MARKET DEVELOPMENT AND ECONOMIC GROWTH IN KOLKATA, INDIA
Abstract
Purpose of the Study: The study sought to determine the impact of financial market development on economic growth in Kolkata, India
Statement of the Problem: This study aims to investigate the relationship between financial market development indicators, such as the size of the stock exchange, availability of diverse financial products, and access to credit, and their influence on key economic indicators, such as GDP growth, investment levels, job creation, and overall economic dynamism. Additionally, the research seeks to identify potential barriers or challenges hindering the positive impact of financial market development on Kolkata's economic growth and propose recommendations to address these issues.
Methodology: The study was literature based. The study collected and analyzed existing research and publications to inferences.
Findings: The findings and discussion on the impact of financial market development on economic growth in Kolkata, India, reveal a strong positive correlation between the two factors. The development of financial markets, such as the stock exchange, banking sector, and availability of diverse financial products, has significantly contributed to the city's economic growth. Increased capital mobilization and investment opportunities provided by the financial market have led to higher levels of production, job creation, and overall economic activity. Moreover, the efficient allocation of resources and risk management facilitated by financial market development have fostered a competitive business environment and encouraged entrepreneurship and innovation, further driving economic growth in Kolkata.
Conclusion: In conclusion, the impact of financial market development on economic growth in Kolkata, India, is substantial and positive. The findings from various studies indicate that a well-developed financial market, including a robust stock exchange, efficient banking sector, and diverse financial products, plays a crucial role in driving economic prosperity in the city. By facilitating capital mobilization, encouraging risk-taking and innovation, and promoting efficient resource allocation, financial market development contributes significantly to the overall economic growth and development of Kolkata, making it a thriving economic hub in the country.
Recommendations: Policymakers should focus on implementing effective regulatory measures to ensure financial market stability and transparency. Strengthening oversight and enforcement mechanisms will build investor confidence and reduce the likelihood of financial crises, fostering a stable financial sector that is vital for sustained economic growth. Efforts to enhance financial literacy and inclusion should be prioritized. Promoting financial education among individuals and businesses will empower them to make informed decisions about their investments and savings, leading to increased financial inclusion and higher savings rates, both of which are critical for supporting economic growth. Stakeholders should encourage the development of new financial products and services and embrace digital financial solutions. Diversifying the financial market and promoting financial technology (fintech) solutions will attract a wider range of investors and foster innovation in the financial sector, contributing to overall economic growth in Kolkata.
Keywords: Financial Market Development, Economic Growth, India
References
Bhattacharjee, S. (2022). Interrelationship between Corporate Governance, Human Resource Management Practices and Firm Performance in Textile Industry of Bangladesh: A Study on the Companies Listed in Dhaka Stock Exchange (Doctoral dissertation, © University of Dhaka).
Chen, Y., & Bellavitis, C. (2019). Decentralized finance: Blockchain technology and the quest for an open financial system. Stevens Institute of Technology School of Business Research Paper.
Chen, Y., Kumara, E. K., & Sivakumar, V. (2021). Investigation of finance industry on risk awareness model and digital economic growth. Annals of Operations Research, 1-22.
Huang, R., Kale, S., Paramati, S. R., & Taghizadeh-Hesary, F. (2021). The nexus between financial inclusion and economic development: Comparison of old and new EU member countries. Economic Analysis and Policy, 69, 1-15.
Khan, H. H. (2022). Bank competition, financial development and macroeconomic stability: Empirical evidence from emerging economies. Economic Systems, 46(4), 101022.
Law, C. C., Zhang, Y., Gow, J., & Vu, X. B. (2022). Dynamic relationship between air transport, economic growth and inbound tourism in Cambodia, Laos, Myanmar and Vietnam. Journal of Air Transport Management, 98, 102161.
Moșteanu, N. R. (2019). International Financial Markets face to face with Artificial Intelligence and Digital Era. Theoretical & Applied Economics, 26(3).
Mukherjee, P., Roy Chowdhury, S., & Bhattacharya, P. (2021). Does financial liberalization lead to financial development? Evidence from emerging economies. The Journal of International Trade & Economic Development, 30(8), 1263-1287.
Nasreen, S., Mahalik, M. K., Shahbaz, M., & Abbas, Q. (2020). How do financial globalization, institutions and economic growth impact financial sector development in European countries?. Research in International Business and Finance, 54, 101247.
Nayak, L. (2023). Economic and soft power component of India’s city diplomacy: With special reference to Mumbai and Kolkata. OASIS-Observatorio de Análisis de los Sistemas Internacionales, (38).
Pereira, V., Budhwar, P., Temouri, Y., Malik, A., & Tarba, S. (2021). Investigating Investments in agility strategies in overcoming the global financial crisis-The case of Indian IT/BPO offshoring firms. Journal of International Management, 27(1), 100738.
Ratnawati, K. (2020). The impact of financial inclusion on economic growth, poverty, income inequality, and financial stability in Asia. The Journal of Asian Finance, Economics and Business (JAFEB), 7(10), 73-85.
Sarwar, A., Khan, M. A., Sarwar, Z., & Khan, W. (2021). Financial development, human capital and its impact on economic growth of emerging countries. Asian Journal of Economics and Banking, 5(1), 86-100.
