Macroeconomic Factors and Capital Markets. Selected Experiences in Central and Eastern Europe



The relationship between capital markets and macroeconomic variables is well documented in developed financial markets, but still developing in emerging financial markets. This paper looks at young financial markets from Central and Eastern Europe, focusing on two markets in the region: Romania and Hungary. Capital markets in these countries are analyzed from the perspective of two of their components: stock exchange markets and mutual funds markets and the effects of five macroeconomic variables (population, GDP/capita, inflation, unemployment, and savings) on the two components assessed. From a methodological point of view, the multiple regression analysis is employed for the period 2003-2019. The analysis is conducted in a comparative manner from two viewpoints: comparing stock exchanges with mutual funds markets and the role played by the macro-level determinants in the development of each and comparing the two national financial markets with one another. The study concludes that macroeconomic factors influence more the development of the stock exchanges than the development of mutual funds and that in the analyzed period, in Romania the impact of the macroeconomic factors on capital markets was stronger than in Hungary.

Full Text:



Agarwal, S., & Khan J.A. (2019). Investigation of Dynamics of Macro-economy and Commodity Mutual Funds: Empirical Evidence from India. Theoretical Economics Letters, 9, 872-894. DOI: 10.4236/tel.2019.94057.

Ahmad, N., & Ramzan, M. (2016). Stock Market Volatility and Macroeconomic Factor Volatility. International Journal of Research in Business Studies and Management, 3(7), 37-44.

Albu, L.L., Lupu, R., & Călin, C. (2014). A nonlinear model to estimate the long term correlation between market capitalization and GDP per capita in Eastern EU countries. Working Paper no. 141115. Retrieved from

Androniceanu, A., Gherghina, R., & Ciobănașu, M. (2019). The interdependence between fiscal public policies and tax evasion. Administrație și Management Public, 32, 32- 41. DOI: 10.24818/amp/2019.32-03.

Ayuku, P.E., & Etale, L.M. (2015). Determinants of stock market development in Nigeria. A co-integration approach. Advances in Research, 3(4), 366-373. DOI: 10.9734/AIR/2015/12912.

Bali, T.G., Brown, S.J., & Caglayan, M.O. (2014). Macroeconomic risk and hedge fund returns. Journal of Financial Economics, 114 (1), 1-19. DOI: 10.1016/j.jfineco.2014.06.008

Barakat, M.R., Elgazzar, S.H., & Hanafy, K. M. (2016). Impact of Macroeconomic Variables on Stock Markets: Evidence from Emerging Markets. International Journal of Economics and Finance, 8(10), 195-207. DOI: 10.5539/ijef.v8n1p195.

BVB (2020). BET index. Retrieved from

Boghean, C. (2014). Features of the capital market’s evolution in Romania in the context of the turbulences produced by the financial crisis. The USV Annals of Economics and Public Administration, 14(2), 58-65.

Boyd, J.H., Jian, H., & Ravi, J. (2005). The Stock Market’s Reaction to Unemployment news: Why Bad Bad News is Usually Good for Stocks. The Journal of Finance, 60, 649- 672.

Celebi, K., & Honig, M. (2019). The Impact of Macroeconomic Factors on the German Stock Market: Evidence for the Crisis, Pre and Post Crisis Periods. International Journal of Financial Studies, 7(2), 1-13. DOI: 10.3390/ijfs7020018.

Cevik, N.K., Dibooglu, S., & Kutan, A.M. (2016). Real and Financial Sector Studies in Central and Eastern Europe: A Review. Czech Journal of Economics and Finance (Finance a uver), 66(1), 2-31.

El-Wassal K.A. (2013). The development of stock markets: In search of a theory. International Journal of Economics and Financial Issues, 3(3), 606-624.

Errunza, V., & Hogan, K. (1998). Macroeconomic Determinants of European Stock Market Volatility. European Financial Management, 4, 361-377. DOI: 10.1111/1468-036X.00071.

Fama, E.F. (1981). Stock returns, Real Activity, Inflation and Money. The American Economic Review, 71, 545-565.

Ferreira, M.A., Keswani, A., Miguel, A.F., & Ramos, S.B. (2012). The flow-performance relationship around the world. Journal of Banking & Finance, 36, 1759-1780. DOI: 10.1016/j.jbankfin.2012.01.019

Filip, D. (2018). The impact of fund attributes on performance: Empirical evidence for Polish equity funds. Zb.rad. Ekon.fak. Rij, 36(2), 465-488.

Filip, D. (2020). Are Fund Attributes Risk Drivers? Evidence for the Polish Mutual Funds. Romanian Journal of Economic Forecasting, XXIII (1), 22-36.

Flannery, M.J., & Protopapadakis, A.A. (2002). Macroeconomic Factors DO Influence Aggregate Stock Returns. Review of Financial Studies, 15, 751-782.

Gay, R. (2016). Effect of Macroeconomic Variables On Stock Market Returns From Four Emerging Economies: Brazil, Russia, India And China. International Business & Economics Research Journal, 7(30), 1-8. DOI: 10.19030/iber.v7i3.3229.

Gera, A. (2007). Macro-economic factors affecting mutual funds in India and basis for evaluating mutual fund performance. Retrieved from _Papers/OP158/op158.htm.

Global Economy (2020). Statistics. Retrieved from

ICI (2020). Statistics. Retrieved from

Ho, S., & Lyke, B.N. (2017). Determinants of stock market development: A review of the literature. Studies in Economics and Finance, 34(1), 143-164. DOI: 10.1108/SEF-05-2016-0111.

Horobeț, A.L., & Dumitrescu, S. (2009). On the causal relationship between monetary, financial and real macroeconomic variables: evidence from Central and Eastern Europe. Economic Computation and Economic Cybernetics Studies and Research, 43(3), 1-17.

Hsing, Y. (2014). Impacts of macroeconomic Factors on the Stock Market in Estonia. Journal of Economics and Development Studies, 2(2), 23-31.

Islam, F.T., Mostofa, M.S., & Tithi, A.A. (2017). Macroeconomic and Institutional Determinants of Capital Market Performance in Bangladesh: A case of Dhaka Stock Exchange. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(1), 306-311. DOI: 10.6007/IJARAFMS/v7-i1/2705.

Kavita, S., & Pasricha, J.S. (2017). Research Paper on Impact of Macroeconomic Indicators on Mutual Funds Market in India. MERI Journal of Management and IT, 10(2), 14-22. DOI: 10.25089/MERI/2017/v10/i2/151160.14.

Lemeshko, O., & Rejnus, O. (2015). Modeling the Size of the Mutual Fund Industry in Countries of Central and Eastern Europe. Financial Assets and Investing, 6(1), 1-28. DOI: 10.5817/FAI2015-1-1.

Liu, M., & Shrestha, K. (2008). Analysis of the long-term relationship between Macro- economic variables and the Chinese stock market using heteroskedastic cointegration. Managerial Finance, 34, 744-755. DOI: 10.1108/03074350810900479.

Megaravalli, A.V., & Sampagnaro, G. (2018). Macroeconomic indicators and their impact on stock markets in ASIAN 3: A pooled mean group approach. Cogent Economics & Finance, 6(1), 1432450. DOI: 10.1080/23322039.2018.1432450.

Nicolescu, L., & Tudorache, F.G. (2016). The Evolution of Non-Banking Financial Markets in Hungary: The Case of Mutual Funds. Management Dynamics in the Knowledge Economy, 4(4), 591-621.

Nicolescu, L., Tudorache, F.G., & Androniceanu, A. (2020). Performance-risk analysis on mutual funds versus stock exchanges in young financial markets. Journal of International Studies, 13(1), 279-294. DOI: 10.14254/2071-8330.2020/13-1/18.

Noshipo, T., Zandile, T., Molebogeng, L., Eberson, J., & Andrew, Ph. (2016). The unemployment – stock market relationship in South Africa: Evidence from symmetric and asymmetric cointegration models. MRPA Paper no. 74101. Retrieved from

Pal, K., & Mittal, R. (2011). Impact of macroeconomic indicators on Indian capital markets. The Journal of Risk Finance, 12(2), 84-97. DOI: 10.1108/15265941111112811.

Paten, S. (2012). The Effect of macroeconomic Determinants on the Performance of the Indian Stock Market. NMIMS Management Review, 22, 117-127.

Paul, S., & Malik, G. (2003). Macroeconomic Factors and Bank and Finance Stock Price: the Australian Experience. Economic Analysis and Policy, 33(1), 23-30. DOI: 10.1016/S0313-5926(03)50002-9.

Rao, V.K., & Daita, N. (2013). Fundamentals factors influencing investment in mutual funds – the EIC approach: a case study of RCAML. Indian Journal of Finance, 6, 4-13.

Rjoub, H., Civcir, I., & Resatoglu, N.G. (2017). Micro and Macroeconomic Determinants of Stock Prices: the Case of Turkish Banking Sector. Romanian Journal of Economic Forecasting, XX(1), 150-166.

Qureshi, F., Qureshi, S., & Ghumro, A.K. (2017). Mutual Funds and Market Variables: A Critical Review of Literature. Journal of Poverty, Investment and Development, 34, 34-48.

Sabău-Popa, D.C., Bolos, M.I., Scarlat, E., Delcea C., & Bradea, I.A. (2014). Effects of macroeconomic variables on stock prices of the Bucharest Stock Exchange (BSE). Economic Computation and Economic Cybernetics Studies and Research, 48(4), 103-114.

Sindelar, J., & Budinski, P. (2019). Does commission remuneration affect the investor’s outcome? Experience from Central and Eastern Europe. Journal of Financial Regulation and Compliance, 27(4), 1358-1988.

Shah, S.A. (2018). Impact of Macro Level Economic Factors on Capital Markets Returns: Evidence from Emerging Market of Asia. Journal of Hotel & Business Management, 7(2), 183-188. DOI: 10.4172/2169-0286.1000183.

Stoltz, O. (2020). The Equity Curve and Its Relation to Future Stock Returns. Journal of Risk and Financial Management, 13(2), 19. DOI: 10.3390/jrfm13020019.

Swiecka, B., Yesildag, E., Özen, E., & Grima, S. (2020). Financial Literacy: The Case of Poland. Sustainability, 12, 700. DOI: 10.3390/su12020700.

Tudorache, F.G., Nicolescu, L., & Lupu, R. (2015). Evolution of mutual funds in Romania: performances and risks. Romanian Journal of Economic Forecasting, 18(4), 180-197.

Tsaurai K. (2018). What are the determinants of stock market development in emerging markets? Academy of Accounting and Financial Studies Journal, 22(2), 1-11.

Tvaronaviciene, M. (2019). Insights into global trends of capital flows’ peculiarities: emerging leadership of China. Administrație și Management Public, 32, 6-17.

Ullah, F., Hussain, I., & Rauf, A. (2014). Impacts of macroeconomy on stock market: Empirical evidence from Pakistan. International Journal of Management & Sustainability, 3(3), 140-146.

Vătămănescu, E.-M., Gazzola, P., Dincă, V.M., & Pezzetti, R. (2017). Mapping Entrepreneurs’ Orientation towards Sustainability in Interaction versus Network Marketing Practices. Sustainability, 9(9), 1580. DOI: 10.3390/su9091580.

Vătămănescu, E.-M., Pînzaru, F., Andrei, A.G., & Zbuchea, A. (2016). Investigating SMEs sustainability with partial least squares structural equation modeling. Transformations in Business & Economics (TIBE), 15(3), 259-273.

Vychytilova, J. (2018). Stock market development beyond the GFC: the case of V4 countries. Journal of Competitiveness, 10(2), 149-163. DOI: 10.7441/joc.2018.02.10.

Yartey, C.A., & Adjasi, C.K. (2007). Stock market development in Sub-Saharian Africa: Critical issues and challenges. IMF Working Paper No. 07/209. Retrieved from

Yusoff, W.F.W., & Guima, I.J. (2015). Stock market development of Middle East and North Africa (MENA) region. International Journal of Business and Economics Research, 4(3), 163-171. DOI: 10.11648/j.ijber.20150403.19.

Zelga, K. (2017). Influence of macroeconomic factors on the financial market. World Scientific News, 78, 164-169.


  • There are currently no refbacks.

Copyright (c) 2020 Management Dynamics in the Knowledge Economy

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

© Faculty of Management (SNSPA)

Creative Commons License
This work is licensed under CC BY-NC

The opinions expressed in the papers published are the authors’ own and do not necessarily express the views of the editors of this journal. The authors assume all responsibility for the ideas expressed in the materials published.

ISSN 2392-8042 (online)