The Impact of the Local Financial Market on Economic Growth: A Case Study of Kazakhstan




Kazakhstan’s financial market has always been the focus of the government attention as an important element of country development. Therefore, the main goal is to build a well-developed, competitive and trustworthy financial market that has a dominant influence on the economy and sustainable development. For countries with economies in transition, achievement of a significant level of economic growth is a prerequisite for the formation of a stable capital market and banking system, that will subsequently have a significant positive impact on economic growth. This study investigates the relationship between the local financial market and economic growth for Kazakhstan based on measures of economic growth and its components, as well as empirical indicators of banking development and stock market — size, liquidity and volatility — used as control variables that determine Kazakhstan’s economy. Time series regression analysis and Granger causality test was performed for data from 1994 to 2017 in order to design country-specific measures for financial development. The results showed that world oil prices and total investment are the most powerful factors influencing economic growth. The direction of causation for Kazakhstan comes from economic growth towards the development of the local financial market, contrary to the postulate that the development of a financial intermediary stimulates economic growth. Therefore, at this stage, the financial sector does not stimulate the economic development of Kazakhstan, but rather the economic growth based on oil production and export is a catalyst for the development of the financial sector. It should be recommended to Kazakhstan’s government to shift the focus from financial market to economic development in order to mobilise sufficient domestic and international investments to transform the economy and make a transition to sustainable growth.

Author Biographies

Yuliya O. Nichkasova , L. N. Gumilyov Eurasian National University

PhD in Finance, L. N. Gumilyov Eurasian National University; Researcher ID: U-4217-2018; Scopus Author ID: 57212195989; (9, Koshkarbaev Ave., Nur-Sultan, 010001, Republic of Kazakhstan; e-mail:

Eduard Nezhinsky , University of Economics in Bratislav

PhD, Assistant Professor, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava; Scopus Author ID: 56183242800; (1, Dolnozemska cesta, Bratiskava, 85235, Republic of Slovakia; e-mail:

Halina A. Shmarlouskaya , Belarus State University of Economics

Dr. Sci. (Econ.), Professor, Faculty of International Business, Belarus State University of Economics; Researcher ID C-4095-2019; Scopus Author ID: 57210997595; (220070, Minsk, 26, Partizanskiy Ave., Minsk, 220070, Republic of Belarus; e-mail:




How to Cite

Nichkasova , Y. O. ., Nezhinsky , E. ., & Shmarlouskaya , H. A. . (2022). The Impact of the Local Financial Market on Economic Growth: A Case Study of Kazakhstan. Economy of Regions, 18(1), 208–222.



Research articles