Testing the Granger Causality between the Dynamics of the Romanian Mutual Fund Market and the Economy

Abstract

The paper tests and evaluates the causality between the dynamics of the Romanian mutual fund market and the economy. Using the Granger causality test, a regression analysis has been developed on quarterly data during 1998Q2 – 2012Q2 for the Romanian economy. Based on this relationship, we can emphasize that the controversial debate upon the economic growth and the mutual fund market has became a complex research subject. Therefore, due to its complexity, the timeliness and the continuous growth of the investment funds area, this paper complements the existing literature by identifying the causal linkage between the mutual fund market and the economy. According to the results of the study, there is no reciprocal causality relationship between economic growth and the mutual fund investments development in Romania.

Keywords

• investment market
• economic growth
• causality