ANALYSIS OF THE THRESHOLD LEVEL EFFECT BETWEEN THE STOCK EXCHANGE AND ECONOMIC GROWTH: AN APPLICATION TO THE IVORIAN ECONOMY

Abstract

We focused on the connection between stock exchange and economic growth applied to the Ivorian economy, by referring to classical theory of efficiency of financial markets. As methodological guideline, a threshold model (TAR model) was estimated through an econometric approach on time series. Our results disclose U-shaped relationship presence between economic growth and stock exchange. In addition, trigger point for size of the stock exchange stands at 7.91% of GDP. The BRVM's stock market is weakly developed because of the fact that narrowness, small number of marketable securities, small transaction volume and liquidity of the stock exchanges and the small size of the national economies, thus contributing to the exacerbation of the handicaps of African stock markets.  But these stock markets can become dynamic under certain conditions.