The present paper tests empirically the existence of a causal relationship between the economic growth and the development in the banking and stock market in transition economies and especially the case of Bulgaria. The Johansen cointegration test indicated one long – run relationship between the banking sector, the stock market and the economic growth while the application of the Granger causality test indicated a bilateral relationship between the economic growth and the development in the stock market, as well as between the economic growth and the development in banking sector. Finally, a unilateral relationship was concluded between the development in credit and stock market
