The relationship between stock market performance and economic growth: The case of Vietnam

Abstract

This study is conducted with an aim to clarify the relationship between stock market performance and national economy in the case of Vietnam. Data about VN-index growth rate and real GDP growth rate from Q1/2004 to Q4/2015 is collected and VAR model together with Granger causality test are employed to determine this relationship. The findings suggest that there is significant relationship between real GDP growth rate and stock index yield with the optimal lag length of eight quarter. Causal relationship was found with direction from stock market development to economic growth. This finding suggests more concern from government on improving stock market performance in order to enhance economic growth.