The Role of Stock Markets in Natural Resources Dependence

YunQian Zhang

School of Finance and Accounting, Fuzhou University of International Studies and Trade, China

Abstract

The focus on sustainable development and a green perspective is increasing for minimizing the effects of the resource depletion and pollution in the economies. China has been pushing green practices, to account for the damage to the environment it has contributed in the past. There is a direct association between the stock market trading activities and surplus of current accounts on the natural resources and green environmental practices. Thus, the present study was developed to study the relationship between the stock markets and natural resource dependency in China. The present study used the novel approach of the ARDL to study the long run and short run relationships between the stock market and natural resource dependency of China. The data for the last 4 decades was used to study the variation and association between the research variables. The ARDL bounds test informed of significant cointegration among the research variables. The estimation indicated that there are direct associations between the stock market value traded and capitalization both in the long and short run. The stock market capitalization and value traded of the stocks in China represent significant affluence over the dependency for the natural resources. This study presents a new vision for China to develop its economic and environmental policies.