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Interaction between the public attitudes and the stock exchange dynamics in Southeastern European countries

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  • Vladimir Tsenkov
  • Ani Stoitsova-Stoykova

Abstract

The relationship between the dynamics of the capital markets of Bulgaria, Croatia, Greece, Slovenia, Turkey, Romania and Macedonia and the public attitudes expressed by the inflation expectation indicators, consumer and business confidence indicators for the period 2005-2015 is analyzed. The results obtained on the Granger causality emphasize the interaction between business confidence and capital markets, and its direction depends on the degree of market development. The dependence in the more developed markets of Turkey, Greece and Croatia is in line with the assumptions of the efficient markets hypothesis (EMH) and on the influence line of "business confidence - a capital market". Reverse dependence is seen in the less developed markets of Bulgaria, Macedonia, Romania and Slovenia. In addition to an inefficiency according to EMH and the theory of real business cycles, this could also be regarded as a prerequisite for strengthening negative market trends and bringing instability to the market in times of crisis. The degree of development of the capital markets also determines their relationship with consumer confidence as in the more developed markets it is directed to the capital markets and in the case of the less developed ones in the opposite direction.

Suggested Citation

  • Vladimir Tsenkov & Ani Stoitsova-Stoykova, 2017. "Interaction between the public attitudes and the stock exchange dynamics in Southeastern European countries," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 93-111.
    • Handle: RePEc:bas:econth:y:2017:i:3:p:93-111
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    References listed on IDEAS

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    4. Maria Ward Otoo, 1999. "Consumer sentiment and the stock market," Finance and Economics Discussion Series 1999-60, Board of Governors of the Federal Reserve System (U.S.).
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    Cited by:

    1. Dodig Ante & Bugarčić Milica, 2026. "Governance Quality and Capital Markets Efficiency in Southeast Europe," Zagreb International Review of Economics and Business, Sciendo, vol. 29(1), pages 235-252.

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    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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