The effects of expansionary fiscal and monetary policies on the financial markets of developing countries

The main purpose of this article is to investigate the relationship between the profitability of financial markets experiencing economic growth and expansionary monetary and financial policies. Therefore, using economic growth models and a panel data approach, the relationship between the financial market profitability variable and other macroeconomic variables was tested for the period from ۲۰۱۰ to ۲۰۲۰. The results of research calculations show a positive and significant relationship between the profitability variable of financial markets and monetary and financial policies. The results show that by applying expansionary fiscal policy (one percent increase), about ۱.۵۲۳۴% is added to the profitability index of financial markets. Furthermore, a ۱% increase in money volume (expansionary monetary policy) and GDP (economic growth) raises the financial market profitability index by ۰.۱۹۴۷ and ۰.۱۵۰۵ points, respectively.

Keywords:

Panel data approach , Fiscal and monetary policies , Financial markets