Abstract. There are different hypotheses in the literature used to explain the causality relationship between financial development and economic growth. In this study, the causality relationship between the value of stock markets, which is a dimension of financial development and economic growth has been examined. For this purpose, in order to reveal the possible differences between developed and developing countries, the stock market data and GDP values obtained from different countries are considered. As analysis method, Toda-Yamamoto Granger causality analysis was used for the period of 1998Q1-2017Q4. In conclusion, unilateral causalities from stock market indexes to economic growth are determined in United States, BRICS countries and Turkey. Therefore, the development of stock markets is leading to economic growth. This result is not different in terms of developed and developing countries. The supply-leading hypothesis, which is one of the two economic growth hypotheses with one-way causality, is valid. However the results for Germany indicate the two-way relations. This means that feedback hypothesis is valid for Germany.

Keywords: stock markets, economic growth, Toda-Yamamoto causality analysis, developing countries, developed countries.