Original Paper


, Volume 8, Issue 2, pp 241-269

First online:

Equity premium in Finland and long-term performance of the Finnish equity and money markets

  • Peter NybergAffiliated withDepartment of Finance, Aalto University School of Business
  • , Mika VaihekoskiAffiliated withDepartment of Accounting and Finance, Turku School of Economics (TSE), University of Turku Email author 


Using new monthly series collected together for the first time for Finland, this paper analyses the performance and development of the Finnish equity and money markets as well as the equity premium and inflation from 1912 to 2009. The series are analyzed and compared to similar series from Sweden and USA. Continuously compounded nominal returns in Finland have been high, 12.91 and 6.44 % per annum for the stock and money markets, respectively. However, taking into account the high annual average inflation rate of 7.77, the Finnish market has provided clearly lower real returns than the US market. On the other hand, the equity premium, 10.14 % per annum, is found to be comparable to that of the United States (9.35 %) and higher than that in Sweden (6.01 %) using an approach similar to Mehra and Prescott (Handbook of the economics of finance, vol 1B. Financial Markets and Asset Pricing, North Holland, 2003). Finally, our empirical evidence suggests that as the Finnish stock market has matured, it shows an increasing degree of informational efficiency while at the same time becoming more intertwined with international markets.


Equity premium Stock market Money market Helsinki Stock Exchange NASDAQ OMX Finland Sweden USA

JEL Classification