TURNOVER AND MARKET VALUE IN CAPITAL MARKETS FROM EUROPEAN UNION

Diana Mureşan () and Monica Pop Silaghi ()
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Diana Mureşan: Faculty of Economics and Business Administration, Babeș-Bolyai University, Cluj-Napoca, Romania
Monica Pop Silaghi: Faculty of Economics and Business Administration, Babeș-Bolyai University, Cluj-Napoca, Romania

No 32-33, Social Responsibility, Ethics and Sustainable Business from Bucharest University of Economic Studies

Abstract: This paper seeks to see if there is a relationship between market liquidity approximated by turnover and market capitalization, both expressed as percentages in GDP for European Union (EU) countries. Turnover represents the total value of shares traded while market capitalization, also known as market value, represents the share price times the number of shares outstanding. We employ a panel data structure with unobserved characteristics for each country modelled as fixed effects. Our data set comprises all 27 EU countries over the period 2001-2011. Our results prove that market capitalization, which in fact can be considered as a size variable is significant for capital market liquidity and implicitly for market performance of the EU countries. This implies as policy recommendation for these countries to enhance their market performance in order to attain a greater turnover as a percentage of their gross domestic product. We thus strengthen the view that capital market liquidity has a vital role for the investment process and for economic growth of countries.

Keywords: capital market; turnover; market capitalization; EU (search for similar items in EconPapers)
Date: 2012-10
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Published in Working Papers Series on Social Responsibility, Ethics & Sustainable Business

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http://www.csrconferences.org/RePEc/aes/icsrog/2012/2012_1_030.pdf First version, 2012, October (application/pdf)

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