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Equity premium in Finland and long-term performance of the Finnish equity and money markets


  • Peter Nyberg

    (Department of Finance, Aalto University School of Business, P.O. Box 1210, 00101, Helsinki, Finland.)

  • Mika Vaihekoski

    (Department of Accounting and Finance, Turku School of Economics (TSE), University of Turku, 20014, Turku, Finland.)


Using new monthly series collected together for the first time for Finland, this paper analyses the performance and development of the Finnish equity and money markets as well as the equity premium and inflation from 1912 to 2009. The series are analyzed and compared to similar series from Sweden and USA. Continuously compounded nominal returns in Finland have been high, 12.91 and 6.44 % per annum for the stock and money markets, respectively. However, taking into account the high annual average inflation rate of 7.77, the Finnish market has provided clearly lower real returns than the US market. On the other hand, the equity premium, 10.14 % per annum, is found to be comparable to that of the United States (9.35 %) and higher than that in Sweden (6.01 %) using an approach similar to Mehra and Prescott (Handbook of the economics of finance, vol 1B. Financial Markets and Asset Pricing, North Holland, 2003). Finally, our empirical evidence suggests that as the Finnish stock market has matured, it shows an increasing degree of informational efficiency while at the same time becoming more intertwined with international markets.

Suggested Citation

  • Peter Nyberg & Mika Vaihekoski, 2014. "Equity premium in Finland and long-term performance of the Finnish equity and money markets," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 8(2), pages 241-269, May.
  • Handle: RePEc:afc:cliome:v:8:y:2014:i:2:p:241-269
    DOI: 10.1007/s11698-013-0101-7

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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Nyberg, Peter & Vaihekoski, Mika, 2014. "Descriptive analysis of the Finnish stock market : Part II," Research Discussion Papers 10/2014, Bank of Finland.
    2. Òscar Jordà & Katharina Knoll & Dmitry Kuvshinov & Moritz Schularick & Alan M Taylor, 2019. "The Rate of Return on Everything, 1870–2015," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1225-1298.
    3. Nyberg, Peter & Vaihekoski, Mika, 2014. "Descriptive analysis of the Finnish stock market: Part II," Bank of Finland Research Discussion Papers 10/2014, Bank of Finland.
    4. Vaihekoski, Mika, 2022. "Helsinki Stock Exchange: trading and listed securities, 1912–1981," Financial History Review, Cambridge University Press, vol. 29(3), pages 326-341, December.
    5. repec:zbw:bofrdp:2014_010 is not listed on IDEAS
    6. Kuvshinov, Dmitry & Zimmermann, Kaspar, 2020. "The Big Bang: Stock Market Capitalization in the Long Run," CEPR Discussion Papers 14468, C.E.P.R. Discussion Papers.

    More about this item


    Equity premium; Stock market; Money market; Helsinki Stock Exchange; NASDAQ OMX; Finland; Sweden; USA;
    All these keywords.

    JEL classification:

    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-


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