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Do Stock Index Futures Affect Economic Growth? Evidence from 32 Countries

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  • İlkay Şendeniz-Yüncü
  • Levent Akdeniz
  • Kürşat Aydoğan

Abstract

This article investigates the relationship between stock index futures markets development and economic growth using time-series methods for 32 developed and developing countries. Evidence of cointegration between stock index futures and real economy in 29 countries suggests the presence of co-movements among the variables, indicating long-run stationarity in those countries. Our findings show that there is Granger-causality from stock index futures markets development to economic growth for middle-income countries with relatively low real per capita GDP, and Granger-causality in the reverse direction for the countries with high real per capita GDP. Variance decomposition and impulse-response function (IRF) analyses results support the existence of a relationship between stock index futures and real economy.

Suggested Citation

  • İlkay Şendeniz-Yüncü & Levent Akdeniz & Kürşat Aydoğan, 2018. "Do Stock Index Futures Affect Economic Growth? Evidence from 32 Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(2), pages 410-429, January.
    • Handle: RePEc:mes:emfitr:v:54:y:2018:i:2:p:410-429
    DOI: 10.1080/1540496X.2016.1247348
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    Cited by:

    1. Duc Hong Vo & Son Van Huynh & Anh The Vo & Dao Thi-Thieu Ha, 2019. "The Importance of the Financial Derivatives Markets to Economic Development in the World’s Four Major Economies," JRFM, MDPI, vol. 12(1), pages 1-18, February.
    2. Hong Vo, Duc & Van Nguyen, Phuc & Minh Nguyen, Ha & The Vo, Anh & Cong Nguyen, Thang, 2020. "Derivatives market and economic growth nexus: Policy implications for emerging markets," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    3. Tasnuva Sharmin, 2023. "The Impact of Stock market on Economic Growth: Evidence of Bangladesh," International Journal of Science and Business, IJSAB International, vol. 30(1), pages 1-12.
    4. Agrawal, Tarunika & Sehgal, Sanjay & Kumar, Muneesh, 2020. "Market development and policy issues for agri-derivatives in India: a study of cotton and mentha," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 33(1), June.

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