In the early 2000s’ the stock markets from Central and Eastern European perimeter began to develop quantitatively and qualitatively in an accelerated manner and Romania and Republic of Croatia did not made an exception to this trend and, also, had not been spared by the effects of the economic crisis, but on the contrary. Given that in this area the position of this institution within the economy is far from being ideal and the contradictory results of the previous studies, our analysis investigates the anomalous nexus between stock market development and economic growth in Romania and Republic of Croatia in the period 2000-2014. Using a VEC framework, our findings indicate a weak bidirectional relation between stock market capitalization and GDP in both cases and the main reasons are a high degree of concentration of stock exchange activity and contagion.


economic crisis, economic growth, emerging markets, stock market capitalization, VAR models


Agnoli, M.Q., Vilan, D (2006) Financing trends in Latin America, BIS Papers, no. 36, pp. 15-27.

Beck, T., Levine, R. (2004) Stock Markets, Banks and Growth: Panel Evidence, Journal of Banking and Finance, 28(3), pp. 423-42.

Benić, V., Franić, I. (2008) Stock Market Liquidity: Comparative Analysis of Croatian and Regional Markets, Financial Theory and Practice, 32(4), pp. 477-498.

Brasoveanu, L. O., Dragota, V., Catarama, D., Semenescu, A. (2008) Correlations between Capital Market Development and Economic Growth: The Case of Romania, Journal of Applied Quantitative Methods, 3(1), pp. 64-75.

Chelley-Steeley, P. (2008) Concentration of the UK Stock Market, Journal of Business Finance & Accounting, no. 35, pp. 541-562.

National Commission for Prognosis (2006) Capital market. Achievements and Perspectives / Piaţa de capital. Realizări şi perspective,, accessed September 25th, 2015.

Cooray, A. (2010) Do stock markets lead to economic growth?, Journal of Policy Modeling, 32(4), pp. 448-460.

Dawson, P. J. (2008) Financial development and economic growth in developing countries, Progress in Development Studies, 8(4), pp. 325-31.

Diaconasu, D. E. (2015) Stock market – economy growth nexus in an emerging country. The case of Romania, Theoretical and Applied Economics, no. 2(603), pp. 103-112.

Elliott, G., Rothenberg, T., Stock, J. (1996) Efficient Tests For An Autoregressive Unit Root, Econometrica, 64(4), pp. 813-836.

Enisan, A., Olufisayo, A. (2009). Stock market development and economic growth: Evidence from seven sub-Sahara African countries, Journal of Economics and Business, 61(2), pp. 162-171.

Horvath, R., Petrovski, D. (2013) International stock market integration: Central and South Eastern Europe compared, Economic Systems, 37(1), pp. 81–91.

Kominek, Z. (2004) Stock markets and industry growth: an eastern European perspective, Applied Economics, 36(10), pp. 1025-1030.

Luintel, K., Khan, M., Arestis, P., Konstantinos, T. (2008) Financial structure and economic growth, Journal of Development Economics, 86(1), pp. 181-200.

Lutkepohl, H. (2004) Applied Time Series Econometrics, Cambridge University Press, Cambridge.

Mazur, E.M., Alexander, R. (2001) Financial Sector Development and Economic Growth in New Zealand, Applied Economics Letter, vol. 8, pp. 545-549.

Moldovan, A. I. (2015) Financial Market’s Contribution to Economic Growth in Romania, Management Dynamics in the Knowledge Economy, 3(3), pp. 447-462.

Naceur, B.B., Ghazouani, S., Omran, M. (2008) Does stock market liberalization spur financial and economic development in the MENA region?, Journal of Comparative Economics, no. 36, pp. 673-693.

Pirovano, M. (2012) Monetary policy and stock prices in small open economies: Empirical evidence for the new EU member states, Economic Systems, vol. 36, pp. 372–390.

Sajter, D., Ćorić, T. (2009) (I)rationality of Investors on Croatian Stock Market: Explaining the Impact of American Indices on Croatian Stock Market, Zagreb International Review of Economics and Business, 12(2), pp. 57-72.

Syllignakis, M.N., Kouretas, G.P. (2010) Dynamic Correlation Analysis of Financial Contagion: Evidence from the Central and Eastern European Markets, International Review of Economic and Finance, no. 20, pp. 717-732.

Singh, A. (2008) Stock Markets in Low and Middle Income Countries. Centre for Business Research, University of Cambridge, Working Papers, no. 377, pp. 1-30.

Stulz, R. M. (2000) Financial structure, corporate finance, and economic growth, International Review of Finance, 1(1), pp. 11-38.

Yıldırım, S., Ozdemir, B. K., Dogan, B. (2013) Financial Development and Economic Growth Nexus in Emerging European Economies: New Evidence from Asymmetric Causality, International Journal of Economics and Financial Issues, 3(3), pp. 710-722.

*** Bucharest Stock Exchange,, accessed September 10th, 2015.

*** Zagreb Stock Exchange,, accessed September 10th, 2015.

Full Text: PDF

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.