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The present study examines the dynamic linkage between financial development and economic growth by taking saving as an intermediary variable in the case of India using annual data from 1970 to 2018. The result indicates the existence of long‐run cointegrating relationship between financial development economic growth. Result from the long run granger causality test reveals unidirectional causal flow from economic growth, savings (both total and private savings) and financial development. On the other hand, financial development also causes economic growth but not through savings. The short‐run causality test results show that economic growth granger causes financial development, but there is no causal flow from financial development to economic growth. Economic growth Granger causes savings (both domestic and private savings) but the savings does not cause economic growth. Bidirectional causalities run from financial development to savings and vice versa. The study concludes that savings can be taken as an important intermediary to run tri‐variate financial‐growth nexus. [ABSTRACT FROM AUTHOR]

The development of stock markets in the financial sector has been important. The expansion of stock markets has compelled various researchers to analyze its relationship with the economic process and development of countries. The studies have revealed that the performance of stock markets in a nation has a positive correlation to its economic growth. Bearing this relationship in mind, studies are being undertaken to recognize the elements responsible for stock market development in several nations. The researchers all around the world are trying to better understand determinants so that government establishments can create and target policies that may help the development of stock markets which further helps in economic development of the state. Throughout the past three decades, the global stock markets surged, and emerging markets played a vital role in this boom. Recent researches have begun to concentrate on the linkages between the stock markets and economic development. There has been an extensive analysis of the connection between the stock market and economic growth, but there is a dearth of theoretical empirical proof on what determines stock exchange development. Keeping in view the importance of stock markets in the development of economic development, the researchers in the present study have tried to bring out the factors that play a positive role in the development of stock market. [ABSTRACT FROM AUTHOR]