The relationship between Economic growth andaccepted bank stock returns in Tehran stock exchange

ABSTRACT : One of the problems in developing countries like Iran is liquidity shortage for fixed investment as a barrier of the economic growth. Economists believe that solution of this problem is direction of the resources available in the country toward manufacturing and industrial sections through money and capital markets. The researches which economists have conducted in recent years indicate that banks of a country on the one hand and stock market on the other hand are effective on the economic growth. This research links the above studies to each other by analyzing relationship between economic growth and return on stock of the banks accepted in stock exchange. This research analyses data of banks accepted in Tehran Stock Exchange from 2005 to 2011 using data panel method. The obtained results indicate positive and significant relationship between return on stock of banks and GDP growth. On the other hand, Granger causality test also shows the bilateral relation.