Long Run Impacts of Interest Rate Liberalization on Stock Market Development

Balogun, Wakilat Olabisi; Dahalan, Jauhari; Hassan, Sallahuddin

doi:10.1016/j.sbspro.2016.04.053

Cited by 4 publications

(6 citation statements)

References 18 publications

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“…This result is also exact while testing by short-run causality Granger. This is consistent with past research results (Balogun et al, 2016) in Sahara African countries. The error correction model has obtained results consistent with the theoretical basis in the adjustment of equilibrium.…”

Section: Discussionsupporting

confidence: 94%

“…Specifically, interest rates have positive effects in the current month but have adverse effects on the next month in Pakistan's stock market. With Panel Data, the research described the long-run negative impact of interest rates on stock markets in 7 selected countries in Africa Sarahan from 1990 to 2003 (Balogun, Dahalan, & Hassan, 2016). The long-run relationship studied in Turkey from 1998 to 2012 by the Johansen cointegration test (Toraman, 2014).…”

Section: Relationship Between the Interest Rate And Stock Indexmentioning

confidence: 99%

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The Role of Gold Prices and Interest Rate in Stock Index: Insights from Vietnam by Using the Autoregressive Distributed Lag Approach

Huong¹,

Trung²

2020

AJFA

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This study aimed to determine the impact of domestic gold prices, interest rates in the stock market index (VNI) in Vietnam for the period of January 2009 to December 2018. This study employed the Autoregressive Distributed Lag (ARDL) to check the association of Independent variable gold prices and the interest rate on the dependent variable stock market index. The results show a close correlation together in the long-run. The Vietnam stock index is adversely affected by fluctuations in the credit market in the short-run. We observed that domestic gold prices and interest rates have one-way causal relations to the stock price index. Similarly, interest rates were causal for gold prices and still not yet had any particular direction. The adjustment in the short-run moves the long-run equilibrium, although the change is quite slow.

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Section: Discussionsupporting

confidence: 94%

Section: Relationship Between the Interest Rate And Stock Indexmentioning

confidence: 99%

The Role of Gold Prices and Interest Rate in Stock Index: Insights from Vietnam by Using the Autoregressive Distributed Lag Approach

Huong¹,

Trung²

2020

AJFA

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“…Schumpeter (1954) andMcKinnon (1982) also assert that the FIs can be effective on growth rate due to their vital role in financing investment. On this basis, an essential part of the World Bank's recommendations to the economies is to support structural reformations that the most important of those have been not repressing NIR and exchange rate and development of the stock market and banking sector (Balogun et al 2016). The firm's financing in all economies is centered on the banking sector and stock market, any of which has a relatively large share in some economies than the other (Levine 2002).…”

Section: Background Literaturementioning

confidence: 99%

“…Hashemzadeh and Taylor (1988) argue that a lower IR could positively affect the stock market through the growth of the current value of the future return. Furthermore, IR can affect economic growth by influencing the stock market (Balogun et al, 2016). In addition, IR is one of the influential factors in the absorption of bank deposits (Finger and Hesse 2009).…”

Section: Monetary Policy the Fis And The Femmentioning

confidence: 99%

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Financial intermediaries and speculation in the foreign exchange market: the role of monetary policy in Iran’s economy

Sadeghi

Marzban

Samadi

et al. 2022

Economic Structures

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Given the high fluctuations of the general price level, the importance of investment, and accessing sufficient financial resources, we examine the effects of monetary policy on the nominal (Inflation) and real (Investment) sectors of a developing economy, like Iran, through the channel of the relationship between bank deposits, stock market, and speculation in the foreign exchange market (FEM). For this purpose, due to regime switching in Iran’s economy, the non-linear relation between the variables has been investigated by applying Markov switching models and annual data of 1988–2018. The results show that the financial intermediaries (FIs) have not had a complementary relationship in both bear and bull market and high and low banks deposits regimes. Both FIs have negatively impacted speculation in the FEM in high and low exchange rates difference regimes. The difference between official and unofficial exchange rates negatively impacted the FIs in bear market and low banks deposits regimes; on the contrary, a positive effect in a bull market and high bank deposits. The effects of both FIs on investment have been positive in high and low investment regimes and negative on inflation rates in high and very high inflation regimes. In comparison, the impact of speculation in the FEM has been negative on investment and positive on inflation. Therefore, in the event of the lack of limitations regarding using interest rate (IR) and the policy of exchange rate unification, the central bank would be able to affect the nominal and real sectors of the economy suitably through the channels of the FIs and the FEM.

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A lesson from COVID-19 pandemic: Developing a survival investment strategy to deal with crisis conditions

Rinaldo,

Vina Anggilia Puspita,

Binti Fatahul Ariffin

2022

JEMA

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This study introduces the novel concept of a stock investment strategy tailored to crises. It adopts a quantitative approach that tests various factors influencing stock price dynamics. In the first stage of the study, a multiple regression analysis is conducted, encompassing macroeconomic indicators such as Southeast Asian, Chinese, and American stock indexes, gold prices, and the impact of COVID-19 on stock prices. Subsequently, an additional examination assesses the influence of LQ-45 company performance on stock price formulation. Finally, a qualitative analysis is employed to scrutinize government policies implemented during the pandemic and their impact on Jakarta Composite Index (JCI) movements. As a result, it is found that all macroeconomic factors exert a significant negative influence on stock prices. Additionally, as COVID-19 cases surge, stock indexes in Southeast Asia, China, and America exhibit a substantial positive effect on stock prices. In contrast, firm performance and gold prices do not significantly affect stock price movements. Moreover, the market also reveals a more favorable response to government initiatives aimed at relaxing activity restrictions and positive developments in vaccination efforts. Lastly, based on the extensive analyses conducted in this study, we have identified four distinct investment strategies tailored explicitly for effectively navigating crises. These strategies encompass diversification, a prudent wait-and-see approach, the Richman party, and the Guerrilla strategy.

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Long Run Impacts of Interest Rate Liberalization on Stock Market Development

Cited by 4 publications

References 18 publications

The Role of Gold Prices and Interest Rate in Stock Index: Insights from Vietnam by Using the Autoregressive Distributed Lag Approach

The Role of Gold Prices and Interest Rate in Stock Index: Insights from Vietnam by Using the Autoregressive Distributed Lag Approach

Financial intermediaries and speculation in the foreign exchange market: the role of monetary policy in Iran’s economy

A lesson from COVID-19 pandemic: Developing a survival investment strategy to deal with crisis conditions

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