Economic facts and figures show that Iran, as a developing country,
has not succeeded desirable saving and investment ratios, comparable to
the international levels. Indeed, factors such as income level and income
distribution, age structure of the population, political and economic risks and
finally frequent changes in rules, regulations and policy decisions have
created impediments and insecure environment for investors.
Consequently, the investors prefer to invest in physical assets rather
than financial instruments like stocks. Furthermore, the more active role and
large share of the banking market against capital market in the Iran economy,
higher risks of investment in Tehran Stock Exchange than investment in real
estate and construction sectors, lower yields of investment in the capital
market and finally the lack of an efficient primary capital market, are all the
factors responsible for non - formation of adequate amount of savings and
pertinent low ratios.
In this article, we study the importance and effectiveness of capital
market evaluation measures such as, liquidating nature of this market and its
role in the economic growth of Iran, through examining the relation between
capital market development and economic growth within a regression model
and explanation of the capital market development-economic growth puzzle
under the Granger cause and effect relationship.