The Impact of Changes in the Market Capitalization of Companies on the Value of GDO - The Case of Bosnia and Herzegovina
The Impact of Changes in the Market Capitalization of Companies on the Value of GDO - The Case of Bosnia and Herzegovina

Summary/Abstract: The main goal of this paper is to assess the impact of market capitalization on stock exchanges in Bosnia and Herzegovina on GDP trends (as an indicator of economic development). The data used in this paper were included in the model of statistical analysis and obtaining indicators of the relative importance of the influence of one variable on another. In this sense, time series analysis will be used. The time consistency of the data will be checked with a vector auto-regression model in order to determine the connection of variables over time, that is, the influence of market capitalization on the movement of GDP. The given analysis will attempt to establish the connection between the given variables and evaluate the strength and importance of the given correlation. Using the ADF test, the stationarity of the time series was determined. The VAR model and the Granger test applied in this paper did not show a sufficient degree of correlation between GDP and market capitalization. Variance decomposition showed a certain causality of the given variables in the short term, while in the long term this relationship shows a weak causality.

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