Monetary Risk and Market Dynamics as Drivers of Capital Market Deepening in ASEAN: A Sustainable Development Perspective

Yohanes Joni Pambelum(1*), Ronni Haga(2), Sunaryo Neneng(3),

(1) Universitas Palangka Raya
(2) Universitas Palangka Raya
(3) Universitas Palangka Raya
(*) Corresponding Author

Abstract


This study investigates the drivers of capital market deepening in ASEAN countries from a sustainable development perspective. It focuses on the influence of stock market returns, GDP growth rate, inflation rate, and IPO activity on the market capitalization-to-GDP ratio. Using a panel dataset covering six ASEAN countries from 2010 to 2024, the study applies the System Generalized Method of Moments (System GMM) to account for endogeneity and dynamic effects. The results reveal that stock market returns and inflation rate have a significant positive impact on capital market deepening, while GDP growth rate and IPO count do not show significant effects. These findings highlight the importance of financial market performance and monetary conditions in enhancing financial depth in emerging markets. The study offers valuable insights for policymakers aiming to strengthen capital markets as a means of supporting inclusive and sustainable economic development in the ASEAN region.


Keywords


G15, E44, O16

References


Liquidity in Malaysia. International Journal of Financial Research, 11(1), 171. https://doi.org/10.5430/ijfr.v11n1p171

Asmarani, T. E., & Ningsih, E. A. (2023). Domestic Credit and Stock Market Impact on Economic Growth: A New Evidence in Five ASEAN Countries. The Winners, 23(2), 95. https://doi.org/10.21512/tw.v23i2.7066

Bouis, H. E., Capelle, D., Dell’Ariccia, G., Erceg, C. J., Peria, M. M., Sy, M., Teoh, K., & Vandenbussche, J. (2025). Navigating Trade-Offs between Price and Financial Stability in Times of High Inflation. IMF Staff Discussion Note, 2025(3), 1. https://doi.org/10.5089/9798229005135.006

Ehigiamusoe, K. U., Lean, H. H., & Chan, J. H. (2019). INFLUENCE OF MACROECONOMIC STABILITY ON FINANCIAL DEVELOPMENT IN DEVELOPING ECONOMIES: EVIDENCE FROM WEST AFRICAN REGION. The Singapore Economic Review, 65(4), 837. https://doi.org/10.1142/s0217590819500553

Fong, L. K., Kogid, M., & Lily, J. (2020). Stock Market Development and Economic Growth in Malaysia: A Revisit from 1982 to 2014. Journal of Social Transformation and Regional Development, 2(1). https://doi.org/10.30880/jstard.2020.02.01.001

Jahan, S., De, J., Jamaludin, F., Sodsriwiboon, P., & Sullivan, C. (2019). The Financial Inclusion Landscape in the Asia-Pacific Region: A Dozen Key Findings. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3442887

Nguyen, K. Q. T. (2021). Determinants of bank performance in Vietnamese commercial banks: an application of the camels model. Cogent Business & Management, 8(1). https://doi.org/10.1080/23311975.2021.1979443

Puschmann, T., Hoffmann, C. H., & Khmarskyi, V. (2020). How Green FinTech Can Alleviate the Impact of Climate Change—The Case of Switzerland. Sustainability, 12(24), 10691. https://doi.org/10.3390/su122410691

Susilo, T. P. (2022). The Effect of Liquidity on Firm Value with Profitability as Moderating Variable. Journal of Economics Finance and Management Studies, 5(12). https://doi.org/10.47191/jefms/v5-i12-38

Abraham, F., Cortina, J. J., & Schmukler, S. L. (2020). The rise of domestic capital markets for corporate financing: Lessons from East Asia. Journal of Banking & Finance, 122, 105987. https://doi.org/10.1016/j.jbankfin.2020.105987

Adiputra, I. G., & Affandi, A. (2018). The Effect of Micro and Macroeconomic on Investment Opportunity. AMAR (Andalas Management Review), 2(2), 59. https://doi.org/10.25077/amar.2.2.59-81.2018

Adoms, F. U., Yua, H., Okaro, C. S. O., & Ogbonna, K. S. (2020). Capital Market and Economic Development: A Comparative Study of Three Sub-Saharan African Emerging Economies. American Journal of Industrial and Business Management, 10(5), 963. https://doi.org/10.4236/ajibm.2020.105065

Akenten, W. N., Boateng, C., & Kiros, H. (2020). The Role of Capital Markets in Economic Growth: Evidence from Ghana. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3530744

Al-Rimawi, M. A., & Kaddumi, T. A. (2021). Factors affecting stock market index volatility: Empirical study. Journal of Governance and Regulation, 10(3), 169. https://doi.org/10.22495/jgrv10i3art15

Arner, D. W., Buckley, R. P., Zetzsche, D. A., & Veidt, R. (2020). Sustainability, FinTech and Financial Inclusion. European Business Organization Law Review, 21(1), 7. https://doi.org/10.1007/s40804-020-00183-y

siedu, M., Effah, N. A. A., Joel, T. N., & Nkwantabisa, A. O. (2021). Stock Market Development, Financial Deepening and Economic Growth in Africa. Journal of Financial Risk Management, 10(1), 1. https://doi.org/10.4236/jfrm.2021.101001

Asmarani, T. E., & Ningsih, E. A. (2023). Domestic Credit and Stock Market Impact on Economic Growth: A New Evidence in Five ASEAN Countries. The Winners, 23(2), 95. https://doi.org/10.21512/tw.v23i2.7066

Ballester, C. P. M. (2025). Environmental Innovation and the Performance of Healthcare Mutual Funds Under Economic Stress. Sustainability, 17(10), 4594. https://doi.org/10.3390/su17104594

Bansal, S., Sharma, G. D., Rahman, M. M., Yadav, A., & Garg, I. (2021). Nexus between environmental, social and economic development in South Asia: evidence from econometric models. Heliyon, 7(1). https://doi.org/10.1016/j.heliyon.2021.e05965

Barbier, E. B., & Burgess, J. C. (2015). Sustainable Development: An Economic Perspective. In Elsevier eBooks (p. 823). Elsevier BV. https://doi.org/10.1016/b978-0-08-097086-8.91029-8

Căpraru, B., Ihnatov, I., & Pintilie, N.-L. (2018). Competition and diversification in the European Banking Sector. Research in International Business and Finance, 51, 100963. https://doi.org/10.1016/j.ribaf.2018.09.014

Dutta, N., & Meierrieks, D. (2021). Financial development and entrepreneurship. International Review of Economics & Finance, 73, 114. https://doi.org/10.1016/j.iref.2021.01.002

Farooq, O., & Ahmed, N. (2017). Does inflation affect sensitivity of investment to stock prices? Evidence from emerging markets. Finance Research Letters, 25, 160. https://doi.org/10.1016/j.frl.2017.10.019

Garbowski, M., Mironova, D., Perevozova, I., Хрущ, Н., & Gudz, I. (2019). INFLUENCE OF IPO ON MACROECONOMIC SECURITY OF COUNTRIES. Journal of Security and Sustainability Issues, 8(4), 841. https://doi.org/10.9770/jssi.2019.8.4(24)

Günay, S., & Can, G. (2022). The source of financial contagion and spillovers: An evaluation of the covid-19 pandemic and the global financial crisis. PLoS ONE, 17(1). https://doi.org/10.1371/journal.pone.0261835

Haini, H. (2019). Examining the relationship between finance, institutions and economic growth: evidence from the ASEAN economies. Economic Change and Restructuring, 53(4), 519. https://doi.org/10.1007/s10644-019-09257-5

Hossin, Md. S., & Hamid, Md. K. (2021). Capital Market Performance and Bangladesh’s Economy: An Empirical Study. Global Business Review, 25. https://doi.org/10.1177/0972150920982247

Ibrahim, A. A., Emeka, O. J., & Ebele, I. P. (2020). Stock Market Development and Economic Development in Emerging Economies. South Asian Journal of Social Studies and Economics, 32. https://doi.org/10.9734/sajsse/2020/v6i130159

ISHIORO, B. O., & Tarurhor, E. M. (2022). HAS STOCK MARKET DEVELOPMENT ENGENDERED SHORT AND LONG-RUN INCLUSIVE GROWTH IN NIGERIA? Finance & Accounting Research Journal, 4(6), 324. https://doi.org/10.51594/farj.v4i6.483

Jahan, S., De, J., Jamaludin, F., Sodsriwiboon, P., & Sullivan, C. (2019). The Financial Inclusion Landscape in the Asia-Pacific Region: A Dozen Key Findings. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3442887

Koranteng, B., & You, K. (2024). Fintech and financial stability: Evidence from spatial analysis for 25 countries. Journal of International Financial Markets Institutions and Money, 93, 102002. https://doi.org/10.1016/j.intfin.2024.102002

Lee, Y.-Y., & Goh, K. (2023). The Happiness-Economic Well-Being Nexus: New Insights From Global Panel Data. SAGE Open, 13(4). https://doi.org/10.1177/21582440231199659

Lepetit, F. (2023). From Traditional to Sustainable Growth. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4372625

Mail, R. R. N., Handoyo, R. D., Ridzuan, A. R., & Razak, M. I. M. (2020). Determinants of International Financial Integration in ASEAN-5 Countries: Recent Findings Based on Panel GMM Approach. International Journal of Academic Research in Accounting Finance and Management Sciences, 10(1). https://doi.org/10.6007/ijarafms/v10-i1/7201

Marwa, T., Muizzuddin, M., & Asngari, I. (2022). Financial Development and Economic Growth; Evidence from Asia-Pacific Countries. IJBE (Integrated Journal of Business and Economics), 6(1), 64. https://doi.org/10.33019/ijbe.v6i1.459

Mulatsih, S. N., Masruri, M., Subiyantoro, H., & Yolanda, Y. (2023). The Influence of The Asean Regional Capital Market on Asean-5 Countries’ Foreign Exchange Reserves. Jurnal Indonesia Sosial Sains, 4(8), 693. https://doi.org/10.59141/jiss.v4i08.866

Naufa, A. M., Hanafi, M. M., & Lantara, I. W. N. (2021). FOREIGN OWNERSHIP, STOCK PERFORMANCE-RISK, AND MACROECONOMIC FACTORS IN ASEAN COUNTRIES. Deleted Journal, 24(1), 151. https://doi.org/10.21098/bemp.v24i1.1165

Odionye, J. C., Ojiaku, E. U., & Uba, C. N. (2023). Impact of interest rate differential, exchange rate changes and political stability on Foreign capital inflow in Nigeria: Discrete threshold regression model. Cogent Economics & Finance, 11(1). https://doi.org/10.1080/23322039.2023.2203590

Owen, M. A. (2020). Stock Market Development and Economic Growth: Empirical Evidence From an Institutional Impaired Economy. International Journal of Financial Research, 11(5), 496. https://doi.org/10.5430/ijfr.v11n5p496

Puschmann, T., Hoffmann, C. H., & Khmarskyi, V. (2020). How Green FinTech Can Alleviate the Impact of Climate Change—The Case of Switzerland. Sustainability, 12(24), 10691. https://doi.org/10.3390/su122410691

Qizam, I. (2021). ISLAMIC CAPITAL MARKET INTEGRATION AND ASYMMETRIC INFORMATION: A STUDY IN THE FIVE ASEAN COUNTRIES FROM THE POST-GLOBAL FINANCIAL CRISIS. Verslas Teorija Ir Praktika, 22(1), 121. https://doi.org/10.3846/btp.2021.12832

Rosário, A. T., & Boechat, A. C. (2025). How Sustainable Leadership Can Leverage Sustainable Development. https://doi.org/10.20944/preprints202503.1157.v1

Setiawan, B., Purnamasari, E. D., & Ulum, M. B. (2020). Macroeconomic Indicators and Stock Market Development on Economic Growth: Empirical Evidence from ASEAN Countries. SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS, 271. https://doi.org/10.29259/sijdeb.v3i4.271-282

Setiawan, B., Ulum, M. B., Siregar, M. I., Sulbahri, R. A., & Arifin, M. A. (2020). Stock Market Development and Commodity Price on ASEAN-5 Economic Growth. https://doi.org/10.2991/aebmr.k.200520.051

Shukla, A. K., & Shaw, T. S. (2023). Long-run Stock Return of IPO Firms in India: Examining Investment and Profitability Hypothesis. Vikalpa The Journal for Decision Makers, 48(1), 21. https://doi.org/10.1177/02560909231157976

Siswanah, E. (2021). Mathematical Study: The consumer price index in the expenditure sub group using factor analysis. Journal of Physics Conference Series, 1796(1), 12118. https://doi.org/10.1088/1742-6596/1796/1/012118

Soedarmono, W., Hasan, I., & Arsyad, N. (2016). Non-linearity in the finance-growth nexus: Evidence from Indonesia. International Economics, 150, 19. https://doi.org/10.1016/j.inteco.2016.11.003

Stoian, A., & Iorgulescu, F. (2019). Sustainable Capital Market. In Palgrave studies in impact finance (p. 193). Springer International Publishing. https://doi.org/10.1007/978-3-030-16522-2_8

Thaker, H. M. T., Thaker, M. A. M. T., Sakti, M. R. P., Sifat, I., Pitchay, A. A., & Hussain, H. I. (2022). Economic policy uncertainty of China and investment opportunities: a tale of ASEAN stock markets. Journal of Economics Finance and Administrative Science, 27(54), 277. https://doi.org/10.1108/jefas-04-2021-0032

Wuaten, F. M. (2022). The Role of Sustainable Finance and Technology at Bank BJB in Supporting the “Sustainable Development Goals.” Aptisi Transactions On Technopreneurship (ATT), 5, 97. https://doi.org/10.34306/att.v5i1sp.318

Xiao, H., Jun-jie, C., & Wang, X. (2018). Does the Belt and Road Initiative Promote Sustainable Development? Evidence from Countries along the Belt and Road. Sustainability, 10(12), 4370. https://doi.org/10.3390/su10124370

Yang, J., Mehdi, M. N. J., Hafeez, M., Kaium, Md. A., & Salahodjaev, R. (2023). Financial Indicators’ Performance and Green Financing Projects: A Comparative Study from PSX and NYSX. Sustainability, 15(6), 5132. https://doi.org/10.3390/su15065132

Organisation for Economic Co-operation and Development. (2024). OECD Economic Outlook, Volume 2024 Issue 2. OECD Publishing. https://www.oecd.org/en/publications/oecd-economic-outlook-volume-2024-issue-2_d8814e8b-en.html

World Federation of Exchanges. (2024). Market Statistics – February 2024. https://focus.world-exchanges.org/issue/february-2024/market-statistics

United Nations. (2023). Financing for Development. https://www.un.org/sustainabledevelopment/financing-for-development/

United Nations Library. (2025). Conference Primer – Sustainable Development Goals: 2025. https://libraryresources.unog.ch/conferenceprimers/sustainabledevelopmentgoals

Foroudia, P., Marvi, R., Cuomo, M. T., & D’Amato, A. (2024). Sustainable Development Goals in a regional context: Conceptualising, measuring and managing residents’ perceptions. Regional Studies, 59(3), 1–16. https://doi.org/10.1080/00343404.2024.2373871

Shukla, A. K., & Shaw, T. S. (2023). Long-run Stock Return of IPO Firms in India: Examining Investment and Profitability Hypothesis. Vikalpa: The Journal for Decision Makers, 48(1), 21–38. https://doi.org/10.1177/02560909231157976

Lu, Y., Grabowski, H., & others. (2019). SDG 9 Handbook. OAPEN Library. https://library.oapen.org/bitstream/handle/20.500.12657/90011/SDG%209-HBK.pdf?isAllowed=y&sequence=1




DOI: http://dx.doi.org/10.33019/ijbe.v10i1.1253

Article Metrics

Abstract view : 0 times

Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License

Integrated Journal of Business and Economics is licensed under a Creative Commons Attribution 4.0 International License.