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

Ilkay Sendeniz-Yüncü, Levent Akdeniz and Kürşat Aydoğan

Emerging Markets Finance and Trade, 2018, vol. 54, issue 2, 410-429

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.

Date: 2018
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DOI: 10.1080/1540496X.2016.1247348

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