, Volume 8, Issue 2, pp 241–269 | Cite as

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

  • Peter Nyberg
  • Mika VaihekoskiEmail author
Original Paper


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




We are grateful for the comments from an anonymous referee, Kristian Rydqvist and David Le Bris as well as for those received at the 28th International Conference of the French Finance Association (AFFI) in 2011. We also gratefully acknowledge the financial support from the NASDAQ OMX Nordic Foundation.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Department of FinanceAalto University School of BusinessHelsinkiFinland
  2. 2.Department of Accounting and Finance, Turku School of Economics (TSE)University of TurkuTurkuFinland

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