Stock market development and economic growth in developing countries: An empirical analysis for Turkey

Abstract

In this current study the causality relationship between the economic growth of a developing country, (Turkey) and the ISE (Istanbul Stock Exchange) 100 Index has been empirically analyzed on the basis of monthly data. Prior to conducting the analysis in a time series, in order to test the stability of the series, a Unit Root Test was initially applied. Subsequent to stabilization, and aiming towards the aim of detecting long-term relationships between the series, a cointegration test was applied, and finally the causality relationship between the series was measured via the Granger Causality Tests. The obtained findings showed that there is a long-term relationship between economic growth and the ISE 100 Index, and a one-way causality relationship with the ISE 100 towards Economic Growth.