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The fixed and floating exchange rate systems exhibit essential differences. The paper attempts to provide empirical clarification concerning the type of exchange rate regime that has the most favourable impact on stock market returns and prices of the BRICS and African markets using the GLM regression method. The results are based on the inverse Gaussian functions and also identity and 1og functions of the estimated generalized linear model. The fixed exchange regime impacted adversely and significantly on the stock prices of both stock markets. The floating regime impacted favourably and significantly on the stock prices of the BRICS and African stock markets at the inverse Gaussian and Gamma identities. Whereas the fixed regime impacted adversely on stock returns of the BRICS markets at Gaussian identity, it impacted positively but rather insignificantly on the performance of stock returns of African markets. For African stock markets, both the floating and fixed regimes impacted stock returns positively, but the impact of the fixed regime is significant and also of a higher magnitude compared to that of the floating regime (17.313>10.885) HIV and Covid-19 deaths have significant inverse effects on stock prices of African stock markets. For the BRICS markets, the effect of Covid-19 on prices and returns was negative but insignificant. Only stock return effect of HIV was adverse and significant for the BRICS markets. The research findings will be useful for financial marketers involved in international financial trade and seeking to align with developments in international financial markets.
The fixed and floating exchange rate systems exhibit essential differences. The paper attempts to provide empirical clarification concerning the type of exchange rate regime that has the most favourable impact on stock market returns and prices of the BRICS and African markets using the GLM regression method. The results are based on the inverse Gaussian functions and also identity and 1og functions of the estimated generalized linear model. The fixed exchange regime impacted adversely and significantly on the stock prices of both stock markets. The floating regime impacted favourably and significantly on the stock prices of the BRICS and African stock markets at the inverse Gaussian and Gamma identities. Whereas the fixed regime impacted adversely on stock returns of the BRICS markets at Gaussian identity, it impacted positively but rather insignificantly on the performance of stock returns of African markets. For African stock markets, both the floating and fixed regimes impacted stock returns positively, but the impact of the fixed regime is significant and also of a higher magnitude compared to that of the floating regime (17.313>10.885) HIV and Covid-19 deaths have significant inverse effects on stock prices of African stock markets. For the BRICS markets, the effect of Covid-19 on prices and returns was negative but insignificant. Only stock return effect of HIV was adverse and significant for the BRICS markets. The research findings will be useful for financial marketers involved in international financial trade and seeking to align with developments in international financial markets.
Purpose: This study aims to examine the impact of inflation on key variables of real estate investment performance and investment decisions. Theoretical Reference: This paper considers several models of real estate investment performance indicators because the effect of inflation on key variables of real estate investment performance is an important factor in investment decisions. Since effective investment decision is key to avert investment loss especially during inflation period, this paper follows the suggestions by Otegbulu (2022) and Georgiv, et al (2002) that property incomes and values are not static during periods of inflation bur responds to economic dynamics, and could infact trigger favourable investment opportunities in real estate. This paper therefore follows these models/suggestions of Otegbulu (2022) and Geoargiv, et al, (2002) to examine several real estate investment to offer appropriate reflection of how inflation impacts of incomes from real estate investment. Method: Data collected were analysed using Pearson Correlation Analysis to determine the relationship between inflation rate and real estate investment performance (measured by annual returns). Regression analysis was also employed on the data to determine the level of contribution or degree of impact of inflation on real estate performance. Also data collected on the exchange rate and real estate performance over the study period were analysed using Pearson Correlation Analysis to determine the relationship between exchange rate and real estate investment performance (measured by annual returns on investment). Regression analysis was also employed on the data to determine the degree of impact of exchange rate on real estate investment performance. Data collected for the analysis and hypotheses testing were secondary data over a period from 2005 – 2022. Result: The study reveals that real estate investment market generates average total annual returns of 21.39% under average inflation rate of 12.5%. The test statistics (Pearson Correlation) results shows that the higher the inflation rate, the lower the performance of the real estate investment. Also, the study reveals that as inflation persists causing exchange rate fluctuations, the test statistics (Pearson Correlation) results shows that higher exchange rate causes lower performance of real estate investment. This could be because more than 90% of the real estate construction materials in the study are imported. Conclusion: It is clear and obvious that inflation impacts highly on real estate and capable of distorting projections in property investment. Rational investors must therefore factor in inflation risk in investment decisions. The study has shown that inflation has significant impact on annual returns of real estate and consequently affects investment performance. The study concluded that the higher the inflation, the lower the performance of the real estate investment and that the continuous rise in inflation rate reduces the purchasing power of the local currency leading to local currency devaluation. Also, it was concluded that higher exchange rate causes lower performance of the real estate in terms of annual returns. Research Implications: One of the major implications of the findings from this study is that as inflation raises the volatility of local currency which adversely affect the cost of construction, real estate investment performance is hindered. The risk element increases which could lead to project cost over-run, abandonment or increased vacancy rate. Investors become skeptical in making investment decisions because of uncertainties. Policy makers should put in place policies and guidelines that will attract cross-border investors who can take advantage of the local currency devaluation to improve their real estate investment portfolios. Originality/Value: The relationship between inflation rate, exchange rate and real estate performance (measured by rate of returns on the investment) is of great concern for real estate practitioners and investors. The study is original well thought efforts of the authors as contribution to real estate practice and education in developing economies currently being threatened by rising inflation. It is believed that this study will be very useful to global investors who will like to invest in the study area in particular and other emerging markets in general.
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