The relationship between venture capital investments and macro economic variables

The objective of this study is to determine the macroeconomic factors affecting the level of venture capital (VC) investments in a country. The first chapter summarizes the concept of venture capital financing. The second chapter reviews the literatüre on venture capital. In the review the studies on Turkey and studies which do not use Turkish data are identified. The results of the review show that an empirical study using the Turkish and emerging market macroeconomic data to investigate the factors affecting the level of VC investsments will make a contribution to the financial literature. To this end a regression model with the level of VC investments as the dependent variable and a logit model for classifying the level of development of VC investments are constructed. The sample period is between 2000 and 2012 and the data of 18 developed and emerging market countries' macroeconomic variables have been collected for the models. The results of the study can be summarized as follows: According to the first model the variables that affect the level of VC investments are GDP, market capitalization and trading volume. According to the second model GDP, the growth in GDP, inflation rate, market capitalization and trading volume are factors affecting the level of development in VC investments in a country. The results suggest that VC industry is more developed in countries that can maintain stable economic growth and has strong capital markets.