Interest Rates and Investment Decisions

1990 ◽  
pp. 156-167 ◽  
Author(s):  
Stephen F. Frowen
Keyword(s):  
Interest Rates ◽  
Investment Decisions

scholarly journals An Evaluation Of Factors Influencing Pension Managers Investment Decisions In Kenya

2011 ◽  
Vol 8 (10) ◽  
Author(s):  
Lucy Jepchoge Rono
Keyword(s):  
Decision Making ◽  
Interest Rates ◽  
Pension Fund ◽  
Investment Decisions ◽  
Legal Framework ◽  
Past Performance ◽  
Factors Affecting ◽  
Fund Managers ◽  
Factors Influencing ◽  
Retirement Funds

This study focused on the analysis of factors influencing pension fund managers investment decisions. The objectives of the study were to identify investment options available to pension fund managers, identify factors that are considered by fund managers when making investment decisions and identify challenges faced by fund managers in making investment decisions. Three representatives from each of the twelve registered fund managers completed the study questionnaire. The questionnaire was administered through the drop and pick later method. Data was analyzed using SPSS (Statistical Package for Social Sciences) and summarized using descriptive statistics such as mean, standard deviation, frequencies, percentages. The study found out that returns, investment risks and trends in interest rates were the most important factors affecting pension managers investment decisions. Decision-making preferences, investment portfolio, past performance and legal framework were rated as less important. Consistency and return maximization in the rate of returns (sustainable long term returns), prevailing economic and political situations-inflation, global markets which determines key indicators like interest rates/ exchange and risk profile of the scheme investment (risk assessment of the board of trustees) in that order are also important qualitative factors in decision making for pension fund investment. The research also found out that few investment avenues/ vehicles, bureaucracy in consultations with trustees and unpredictable/ turbulent and dynamic market situations in that order are the major challenges facing fund managers investing pension funds. The researcher identified a need for a portfolio that will give higher returns. There is also need to harmonize all regulations relating to pensions in order to create efficiency and avoid confusion. The research also recommends that RBA benchmarks with the world best in order to help the sector to achieve growth. The promotion of retirement funds and regulatory functions should be separated to avoid conflict of interest in the two roles.

scholarly journals PENGARUH SUKU BUNGA, NILAI TUKAR, PERTUMBUHAN EKONOMI, KINERJA KEUANGAN, KEPUTUSAN PENDANAAN, DAN KEPUTUSAN INVESTASI TERHADAP NILAI PERUSAHAAN

2021 ◽  
Vol 9 (1) ◽  
Author(s):  
Dwi Nova Wijaya
Keyword(s):  
Economic Growth ◽  
Exchange Rates ◽  
Financial Performance ◽  
Interest Rates ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Investment Decisions ◽  
Multiple Linear Regression Analysis ◽  
Firm Financial Performance ◽  
Industrial Sectors

Value of the firm illustrates how well or not management manages its wealth. The firm's high value can increase prosperity for shareholders, so it can influence investor perception of the company. Every company is required to be able to process the important functions that exist in the company effectively and efficiently so that the company can be superior. Value of the firm can be influenced by macro-economic conditions in a country and micro-economics in industrial sectors. This study aims to test macro-economic factors, namely, the influence of interest rates, exchange rates, economic growth and micro-economics, namely financial performance, funding decisions and investment decisions on the value of the firm. The population of this research is 100 companies at Kompas 100 listed on the Indonesia Stock Exchange in 2015 – 2019. Samples of this study as many as 51 companies were selected based on purposive sampling techniques. The data analysis method used is multiple linear regression analysis. The results showed that there is a negative and insignificant influence of interest rates, economic growth on the value of the firm. Exchange rates and investment decisions have a positive and insignificant effect on the value of the firm. Financial performance has a positive and significant effect on the value of the firm. Financial decisions have a negative and significant effect on the value of the company.

scholarly journals ANALISIS SUKU BUNGA, KURS DAN INFLASI TERHADAP RETURN SAHAM BLUE CHIP SEKTOR PERBANKAN

2020 ◽  
Vol 3 (1) ◽  
pp. 276-281
Author(s):  
Delia Wijayanti ◽  
Sishadiyati .
Keyword(s):  
Regression Analysis ◽  
Exchange Rates ◽  
Interest Rates ◽  
Stock Returns ◽  
Banking Sector ◽  
Linear Regression Analysis ◽  
Investment Decisions ◽  
Multiple Linear Regression Analysis ◽  
Analysis Models ◽  
Blue Chip

This study aims to analyze the factors that influence stock returns, especially blue chip stocks in the banking sector. The variables used in this study are interest rates, exchange rates and inflation. This research uses a quantitative approach with multiple linear regression analysis models. The results showed that the variable interest rates, exchange rates and inflation affect the blue chip stock returns of the banking sector. But partially, interest rates do not affect the blue chip stock returns of the banking sector while the exchange rate and inflation affect the blue chip stock returns of the banking sector. This research is very useful for investors in making investment decisions, especially in the banking sector.

scholarly journals Corporate governance, agency costs and investment appraisal: An assessment

2012 ◽  
Vol 9 (4-2) ◽  
pp. 208-220
Author(s):  
Baliira Kalyebara ◽  
Abdullahi D. Ahmed
Keyword(s):  
Corporate Governance ◽  
Interest Rates ◽  
Capital Markets ◽  
Capital Market ◽  
Firm Value ◽  
Agency Costs ◽  
Investment Decisions ◽  
Market Interactions ◽  
Investment Appraisal

Undoubtedly, capital markets have an impact on investment appraisal decisions through interest rates (cost of capital) charged and debt covenants stipulated in debt contracts. However, the extent of influence of their interactions in shaping and determining a firm’s corporate governance policy, agency costs, investment decisions and firm value has been overlooked or not duly emphasised in the literature to date. This lack of interdisciplinary research in areas such as finance, accounting, capital markets and corporate governance may lead financial managers making wrong interpretation of the current empirical evidence. This may result into suboptimal decisions in capital budgeting decisions. There are various existing studies that have discussed the relation between corporate governance and one or two other business topics this paper is assessing. However, questions have persisted about the role capital markets’ interactions play in determining firm’s corporate governance, minimizing agency costs, long term investment decisions and firm value. The recent high profile global company collapses mainly due to poor corporate governance mechanisms have rekindled the interest in the role capital market interactions play in formulating firm’s corporate governance rules and policies and their impact on agency costs, investment appraisal decisions and firm value. This study intends to assess this issue and critically evaluates these related issues. The impact of multiple objectives on long-term investment decisions is also discussed. We find that capital market interactions have a significant impact in the way firms formulate their corporate governance, identify and control agency costs, optimize multiple objectives, make investment decisions and determine firm value. In a nutshell, there is a consensus among researchers that capital markets impact on capital investment decisions and firm value through interest rates, debt covenants that impact on managers’ self-interest behaviour, corporate governance policies and agency costs.

scholarly journals Growth and Decline of Assets: On Biased Judgments of Asset Accumulation and Investment Decisions

2014 ◽  
Vol 45 (1) ◽  
pp. 29-35 ◽  
Author(s):  
Nichel Gonzalez ◽  
Ola Svenson
Keyword(s):  
Interest Rates ◽  
Capital Accumulation ◽  
Predictive Power ◽  
Investment Decision ◽  
Investment Decisions ◽  
Hyperbolic Discounting ◽  
Hyperbolic Model ◽  
Asset Accumulation ◽  
Descriptive Model ◽  
Biased Judgments

Abstract Previous research showed that accumulations of capital following stationary interest rates are underestimated by human judges. Hyperbolic discounting was suggested as a descriptive and explanatory model for this phenomenon. First, we investigated judged accumulated capital after a period of annual growth and decline. The degree of underestimation increased with accumulated growth and the results supported hyperbolic discounting as a descriptive model on the group level. However, the hyperbolic model did not apply to the data for one third of the participants. Second, we investigated how investment decisions were related to capital accumulation before the investments and to judgments of the possible outcomes of the future investments. To our surprise, the participants’ judgments of expected future accumulated capital did not add predictive power to predictions based on whether there was growth or decline before the investment decision. Unfortunately this strategy leads to suboptimal investment decisions

scholarly journals RAZVOJNA POLITIKA I OCENA INVESTICIONIH PROJEKATA U MSP SRBIJE / DEVELOPMENT POLICY AND EVALUATION OF INVESTMENT PROJECTS OF SMALL AND MEDIUM ENTERPRISES IN SERBIA

2016 ◽  
Vol 11 (1) ◽  
Author(s):  
Marko Laketa ◽  
Jugoslav Aničić ◽  
Luka Laketa
Keyword(s):  
Interest Rates ◽  
Development Policy ◽  
Small And Medium Enterprises ◽  
Investment Decision ◽  
Investment Decisions ◽  
Development Economic ◽  
Negative Consequences ◽  
Investment Projects ◽  
High Interest ◽  
Medium Enterprises

Ensuring a favorable investment environment represents a very complex aspect of the development economic policy which entails a solid legislative framework, efficient and fair justice system, minimal administrative obstacles for investments, solid physical infrastructure, skilled and qualified workforce etc. Investment policy of the enterprise defines specific programs which accomplish the development goals. Basic principles, which represent the foundation for the development policy, are coordination with the major enterprise goals and absolute consistency with the development policy. Consequences of investment failures have impact not only on the enterprise, but also on the wider area or field of operations. Problems of rational investing, or efficient planning and realization of appropriate investment projects are categorized as key issues in the development of every enterprise. Small and medium enterprises in Serbia face low-liquidity levels and lack of their own investment resources for development and investment projects.Regardless of the choice complexity and frequent inability to evaluate and compare investments quickly, investment decisions are often based on intuition and empirical facts, rather than precise calculations. The exact scientific approach is indispensable, particularly in complex situations dominated by numerous conditioning factors, without disregarding the fact that following all estimates and evaluations, the choice and investment decision is made by the human taking into consideration immeasurable factors not included in the estimates, which however, effect the choice and investment decision. Investment decisions in our enterprises are still very often based on intuition and empiricism, while extensive research and investment argumentation is carried out only after decisions are made with the aim to obtain financial resources.Consequences of irrational and failed investments are enormous and immense. Their effect is not only limited to the company and all related organizations, but it also extends wider, frequently to the whole field in which the company operates. The greatest negative consequences of irrational investing are reflected in underdevelopment, and since they are not too clear and visible very little attention is payed to them. Over time, these consequences lead to absence of positive results, stagnation and losses, as well as gradual slowing down of the company, relative to other competitive enterprises, as well as stagnation in technological development and inability to effect its own development within required time frames.This is the reason why investment project are carried out with high interest rates of borrowed funds, mainly high interest loans with short-term returns. This kind of situation requires additional precautions in evaluating feasibility of investment projects, since investment failures carry major negative consequences both for the enterprise, and the area or field of operations.

The Association between Accounting Earnings, Dividends, Stock Prices and Stock Returns: Value Relevance of Accounting Standards in the Tunisian Stock Market

2017 ◽  
Vol 7 (1) ◽  
Author(s):  
Ahmed Bouteska ◽  
Boutheina Regaieg
Keyword(s):  
Stock Market ◽  
Interest Rates ◽  
Stock Returns ◽  
Stock Prices ◽  
Value Relevance ◽  
Explanatory Power ◽  
Investment Decisions ◽  
Accounting Earnings ◽  
Stock Market Returns ◽  
The Impact

This present study aims to examine the relationship between accounting earnings, dividends, stock prices and stock returns for companies listed at the Tunisian stock exchange. Using panel data obtained from the annual reports and financial statements of 57 Tunisian companies over the period 2005-2015, we show the existence of an earning-dividend-return significant positive relation by applying four models developed from Easton and Harris (1991), Frino and Tibbits (1992) and Kothari and Zimmerman (1995).. The empirical results indicate a significant value relevance of accounting earnings and dividends reported by Tunisian companies under the standards generally accepted in Tunisia. Particularly, it appears from our main findings in regressions the relative explanatory power of above variables on stock market returns which clarifies the important proportions of variations of stock returns in Tunisia. The findings from the study also reveal that shareholders pay a special attention to the impact of dividend and dividend yield on stock returns. Moreover, investors should consider informative earnings numbers as investment criteria as well as many other factors for example interest rates and industry performance affecting stock returns when it comes to make investment decisions. Based on these results and due to the importance of accounting earnings in investment decisions we recommend that there is need for investors to carefully use financial advisory information that financial analysts provide to them in order to determine what the correct and comparable earnings per share (EPS) or dividend per share (DPS) of each company.

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