This paper evaluates the contribution of capital markets on the economic growth of
Botswana. It focuses on the bond markets and stock markets using the Botswana Bond
Index and the Domestic Companies Index as proxies respectively, and Gross Domestic
Product as a measure of economic growth. A 6 year quarterly time series data from
2012 to 2017 was used in the analysis. Multiple regressions model was employed
followed by cointegration test to establish the significance and long-run relationship
respectively between capital markets and economic growth. Vector Error Correction
Model is also employed to check for short term dependencies in the data series used.
The findings from this research suggest that capital markets in Botswana do not
contribute to economic growth in the short run. However, in the long run capital
markets do contribute to economic growth through further capital markets
development. The implications are that in the short run government and policy makers
should devise appropriate policies that will improve the development of capital
markets as thus have a potential to foster economic growth in the long run.

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