Impact of interest rate on stock market literature review.
De Gregorio also argues that credit constraints have negative effects on human capital accumulation and, hence, on output growth. It has been observed that a stock market plays a pivotal role in economic growth through enhanced domestic savings and increased quantity and quality of investment Nordin et al.
Individually, only interest rates and copper prices were candle essay in english to have a significant long term impact on the stock market. This section will present a short review of the literature on the effects of commodity prices and macroeconomic factors, namely interest rate and exchange rate on the stock market performance.
This research utilizes balanced panel data and the period is restricted to the availability of data.
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Moreover, Wicksell states that the interest rate in the credit market is smaller than the natural rate of interest; in this manner, employers expect their income rise above their costs.
Notable among them were Zambia, Ghana and Nigeria http: In this regard, it is wortth pointing out the work from: On the other hand, he finds that the loans granted by the financial system to the private sector have a negative influence application letter industrial training growth, while financial deepening of the economy seems to depend positively on economic growth for developing countries and negatively by developed.
Monthly data ranging from January to Decembercovering a period of 12 years was used in this study.
How Interest Rates Affect the Market
A test whether the frequency distribution of the variable deviates from a normal distribution was done using Jarque-Bera statistics. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
The estimated coefficient for the exchange rate is positive but statistically insignificant as the p value is 0. Figure 3.
The dependent variable is GDP per capita as a proxy of economic development at constant prices of Nordin et al.
Please ask IU to update the entry or send us the correct email address. Statistics of the variables under study. A number of studies carried out in this area have revealed different results due to the period of study, study context and the methodologies used Nordin et al.
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- It is important to note that the error correction, variable has the negative sign as indicated in Table 7 above and its statistically significant confirming the presence of the long run relationship among the variables.
Similarly, this problem was also observed by Nordin et al. On the other hand, Levine et al. Moreover, De Gregorio studies credit constraints that increase aggregate savings, which, in turn, contributes to economic growth.
When requesting a correction, please mention this item's handle: Carrying out estimation without establishing whether data is stationary or not is equivalent to Table 2. Most of these studies suggest that financial development positively affects economic growth.
This allows to link your profile to this item. The decrease in the price of copper has weakened the strength of the currency and widened the budget deficit. Indicating that there is no long st. augustine thesis effect on the LuSE Index.
They both move around the non Zero or constant point. These studies have been done in developed countries, hence the need for this study to apply them in developing country context, Zambia to be specific. Different commodity prices and macroeconomic factors have been applied to assess their impact on stock market performance and also different time periods either yearly or monthly.
The Impacts of Interest Rate on Stock Market: Empirical Evidence from Dhaka Stock Exchange
The graphic analysis compares the dependent variable LuSE price index essay on last day in my school each of the four independent variables Interest rates, Exchange rate, Copper and oil prices. While the LuSE index had an upward trend the exchange rates seem to be stable. The results for Johansson cointegration test in Table 4 shows that there is cointegration as trace statist value or