Stock Exchange Maturity And GDP Per Capita

Abstract

This study examines the impact of domestic stock exchanges on the economic growth and development of 26 East European and former Soviet Bloc countries.  Growth in domestic financial markets should positively influence a country’s economic output as measured by GDP per capita. An investigation of the noteworthy relationship between the level of economic activity and both the operations of the current stock market and the existence of stock exchanges prior to communism is formulated.  Countries with stock exchanges prior to communism, have reintroduced free-market characteristics more rapidly than those, which did not.  A positive correlation between economic activity and variables for volume of stock exchange trade and market value of exchange trade is also found.  The number of companies listed and the number of exchange members do not appear to be important variables.