Wen June

This study examines the relationship between stock market and economic growth in Malaysia and United Kingdom. The analysis utilised three measures of stock market performance, namely, stock market index, trading volume, and turnover ratio. A time- series investigation is conducted over the period of 2005 to 2013, using quarterly data. The Ordinary Least Square (OLS) estimator is used to determine the relationship of stock market and economic growth. Furthermore, various tests are performed to identify the significance of each stock market indicators towards the economic growth. The empirical results illustrate that stock market index and trading volume are positively correlated to economic growth in Malaysia and United Kingdom. However, turnover ratio is negatively correlated to economic growth in both of the countries.