Linkages Between Market Capitalization and Economic Growth: The Case of Emerging Markets

Gökhan Dökmen; Ahmet Aysu; Mehmet Fatih Bayramoğlu

Linkages Between Market Capitalization and Economic Growth: The Case of Emerging Markets

Year 2015, Volume: 1 Issue: 1, 39 - 48, 01.09.2015

Gökhan Dökmen Ahmet Aysu , Mehmet Fatih Bayramoğlu

Abstract

Recent years has seen a market rise in the debate among academic and policy circles regarding the relationship stock markets and economic growth. In this study, the linkages between market capitalization and economic growth is analyzed using annual data of 8 emerging countries for the period 1991 to 2012. The main objectives of this study are to determine the reaction of economic growth in the face of a shock in market capitalization rate and to examine whether stock market development has a positive or negative effect on national economies. Using Panel Vector Autoregressive models, we find positive and statistically significant responses to a market capitalization rate shock

Keywords

Market Capitalization Rate, Gross Domestic Product, Panel Vector Autoregressive Models

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