This study examines the role of macroeconomic variables on stock prices movements in Panama and Costa Rica. We use Panama and Costa Rica Stock Indexes to represent stock market development. The local stock market in Panama and Costa Rica are in an emerging stage, and by not being fully develop, their potential as a source of financing and its contribution to economic development, has remained low. This stage of the stock market is originated in a set of economic factors rather than one economic factor where the potential as a source of financing to the real economy has been affected. This study aims to focus in the economic factors and provide explanations on the low growth and compare the stock markets evolution in these two countries.
The Panamanian stock market has grown considerably in recent decades, but it remains illiquid and concentrated. Listed companies began to decrease in the Costa Ricans stock market when a series of regulations and norms were implemented, which make difficult for investors to enter the market. This research study the recent evolution of the Panamanian and Costa Ricans stock market in comparative terms and use statistics technique (multiple regression analysis) in order to explain long-run relationships between macroeconomic variables and the stock market development. It is found that macroeconomic variables are relevant for the development.

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