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Macroeconomic Determinants Of Stock Market Development: Evidence From Borsa Istanbul

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  • BAYAR, Yılmaz

    (Usak University, Department of Economics)

Abstract

Stock markets have experienced significant improvements especially during the past 30 years, fostered economic growth and become one of the important leading indicators for the economies. Economic growth, saving rate, banking sector development, trade openness, foreign direct investments, institutional quality and stock market liquidity are found to be major determinants behind stock market development in the literature. This study investigates major macroeconomic determinants of stock market development in Turkey during the period 2005:Q1-2015:Q3 using ARDL cointegration, Toda and Yamamoto (1995) causality test and regression analysis. We also found that both economic growth and stock market liquidity had positive impact on stock market development in the long run, while inflation had negative impact on stock market development in the long run.

Suggested Citation

  • BAYAR, Yılmaz, 2016. "Macroeconomic Determinants Of Stock Market Development: Evidence From Borsa Istanbul," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 20(1), pages 69-89.
  • Handle: RePEc:vls:finstu:v:20:y:2016:i:1:p:69-89
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    References listed on IDEAS

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    1. Adam, Anokye M. & Tweneboah, George, 2008. "Foreign Direct Investment and Stock market Development: Ghana’s Evidence," MPRA Paper 11985, University Library of Munich, Germany, revised 2008.
    2. Syed Ali Raza & Syed Tehseen Jawaid & Sahar Afshan & Mohd Zaini Abd Karim, 2015. "Is stock market sensitive to foreign capital inflows and economic growth?: Evidence from Pakistan," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, vol. 8(3), pages 142-164, October.
    3. Syed Raza & Syed Jawaid, 2014. "Foreign capital inflows, economic growth and stock market capitalization in Asian countries: an ARDL bound testing approach," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 375-385, January.
    4. Andreas Billmeier & Isabella Massa, 2007. "What Drives Stock Market Development in the Middle East and Central Asia—Institutions, Remittances, or Natural Resources?," IMF Working Papers 07/157, International Monetary Fund.
    5. Charles Amo Yartey, 2010. "The institutional and macroeconomic determinants of stock market development in emerging economies," Applied Financial Economics, Taylor & Francis Journals, vol. 20(21), pages 1615-1625.
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    Cited by:

    1. Ho, Sin-Yu & Odhiambo, Nicholas, 2017. "Analysing the macroeconomic drivers of stock Market development in the Philippines," Working Papers 23439, University of South Africa, Department of Economics.
    2. Ho, Sin-Yu & Odhiambo, Nicholas, 2017. "The macroeconomic drivers of stock market development: Evidence from Hong Kong," Working Papers 23438, University of South Africa, Department of Economics.

    More about this item

    Keywords

    Macroeconomic Variables; Banking Sector; Stock Market; Time Series Analysis; Turkey;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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