ECONOMIC DYNAMICS – STOCK MARKET EVOLUTION: A RELATION COMMITTED TO DYSFUNCTIONALITY IN ROMANIA AND CROATIA

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.