scholarly journals Macroeconomic Influence on the Nepalese Stock Market

2019 ◽  
Vol 31 (1) ◽  
pp. 47-64
Author(s):  
Mukti Bahadur Khatri
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Stock Market ◽  
Money Supply ◽  
Stock Prices ◽  
Economic Activity ◽  
Direct Investment ◽  
Negative Relationship ◽  
Short Run

This study examines the dynamic relationship among the stock market and macroeconomic factors such as nominal domestic variables (inflation, money supply, and interest rate), real economic activity (gross domestic product) and foreign variable (exchange rate and foreign direct investment) of Nepal. It has used Johansen and Juselius (1990) method of multivariate cointegration for the period Mid-July 1994 to Mid-July 2015. The finding of this study shows that the stock prices are positively and significantly related to money supply. Real economic activity and interest rate have insignificant and negative relationship with the stock prices. Similarly, foreign direct investment, inflation (CPI) and exchange rate with US dollar have a positive and insignificant relationship with the Nepalese stock market. Accordingly, the VEC estimates suggest that there is no significant effect of macroeconomic variables to the Nepalese stock price in the short run. In general, the presence of cointegration and causality suggest that Nepalese stock market is not efficient in both the short run and the long run.

Economic Activities and Oil Price Shocks in Indian Outlook: Direction of Causality and Testing Cointegration

2021 ◽  
pp. 097215092199049
Author(s):  
Preeti Sharma ◽  
Avinash K. Shrivastava
Keyword(s):  
Exchange Rate ◽  
Stock Market ◽  
Stock Prices ◽  
Economic Activity ◽  
Negative Relationship ◽  
Oil Prices ◽  
Industrial Output ◽  
Market Prices ◽  
Macroeconomic Variables ◽  
Short Run

The current study intends to find out the linkages between crude oil prices and economic activity in the context of Indian economy. The macroeconomic variables such as gross domestic product (GDP), unemployment, industrial output, inflation, exchange rate and stock market prices have been used as a proxy to economic activity. We have analysed the sample data of 30 years, that is, from year 1991 to 2020. To inspect the short-run relationship between oil prices and the above-mentioned macroeconomic variables, Granger causality test has been applied after removing the presence of unit root through differencing the series. To investigate the long-run relationship, vector error correction model (VECM) has been applied after testing cointegration through the Johansen method of cointegration. The findings of the study show that oil prices have short-run causality with all the variables, that is, GDP, unemployment, industrial output, inflation, exchange rate and stock market prices, while they have a long association with inflation, industrial production and unemployment. Further we find a negative relationship between oil prices and unemployment, industrial output, inflation and exchange rate and a positive relationship with GDP and stock prices.

scholarly journals Economic Analysis Of The Determinants Of Foreign Direct Investment (FDI) In Nigeria

2020 ◽  
Vol 8 (1) ◽  
pp. 74-81 ◽  
Author(s):  
Emmanuel Oluwagbenga Adebayo ◽  
Suleiman Purokayo Gambiyo
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Direct Investment ◽  
Trade Openness ◽  
Negative Relationship ◽  
Least Square ◽  
Economic Policies ◽  
Macroeconomic Policies ◽  
Ordinary Least Square

The study examined the factors that determine Foreign Direct Investment (FDI) in Nigeria.  It assessed the extent to which exchange rate, interest rate, degree of trade openness affects foreign direct investment inflow to Nigeria.  The study used data from Central Bank of Nigeria (CBN) Bulletin and World Bank (1981 - 2017).  The results were interpreted based on the Ordinary Least Square (OLS) method, apart from series of test statistics and some diagnostics on data was performed. The estimated linear regression model reveals that the degree of openness positively and significantly affect FDI. Exchange rate has a positive but non-significant relationship with FDI and interest rate has a negative relationship with FDI, but it is not statistically significant. The study therefore recommends that economic policies that allow free trade should be formulated since macroeconomic policies are important in stabilization, enhance standard growth and improvements in the standard of living as a result of improved and higher productivity.

scholarly journals Corruption and Stock Market Development: Evidence from Asian Countries

2018 ◽  
pp. 357-362
Keyword(s):  
Foreign Direct Investment ◽  
Stock Market ◽  
Money Supply ◽  
Direct Investment ◽  
Investment Decision ◽  
Negative Relationship ◽  
Income Level ◽  
Market Development ◽  
Asian Countries ◽  
Stock Market Development

Stock market plays a significant role in corporate financing. However, stock market movements were highly affected by certain external factors such as economic, psychological and political factors. By using the sample of 10 Asian countries, this study intends to investigate the impacts of macroeconomic and corruption factors on the stock market development. The sample period covered from the year 2003 to 2015. The dependent variable used in this study was stock market development. Whilst, the variables of interest used in this study were i) income level, ii) savings, iii) foreign direct investment, iv) value of stocks traded, v) money supply and vi) corruption perception index (CPI). A panel data approach had been applied in testing the relationship between the variables due to the nature of data. As expected, the gross domestic savings, foreign direct investment, and money supply were found to have a significant relationship with stock market development. On the other hand, the income level found to have a significant negative relationship with the stock market development. Noteworthy, the results also indicated that lower corruption level could lead to the growth of stock market development. Thus, a change in corruption level was the important matter to be considered before making any investment decision as corruption level had a significant impact on the stock market development.

scholarly journals The Effect of Monetary Policy on Foreign Trade in Nigeria

2020 ◽  
Vol 4 (1) ◽  
pp. 1-8
Author(s):  
Ashamu Sikiru O.
Keyword(s):  
Monetary Policy ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Foreign Trade ◽  
Error Correction ◽  
Money Supply ◽  
Direct Investment ◽  
Trade Openness ◽  
The Impact

This research work investigated the impact of monetary policy on foreign trade in Nigeria during the period 1981 to 2017. The research made use of secondary data which are collected from the Central Bank of Nigeria, Statistical Bulletin (2017). The model obtained from the result represents a Error Correction Model (ECM) which relates the dependent variable (Net Import) to several predictor variables Money Supply, Interest Rate, Exchange Rate, Foreign Direct Investment and Trade Openness. From the findings of the study, the error correction term (speed of adjustment towards equilibrium) value of -0.53581 is significant at 5% and implies that there is a long run causality running from monetary policy   activities measures of foreign trade. However, only all the variable was used in the study was significant at 5% level of significance. This implies that monetary policy in Nigeria has a positive influence on foreign trade within the period, except for interest rate that has a negative coefficient and not significant. In conclusion, these intermediate variables of monetary, the exchange rate arguably have a huge impact on the economy because of its effect on the value of local currency, domestic inflation, macroeconomic credibility, capital flows and financial stability. Increased exchange rate directly affects the prices of imported commodities and an increase in the price of imported goods and services contributes directly to increase in inflation. Based on the analysis, the study concluded that there is significance relationship between money supply and net import in Nigeria and also that there is relationship between foreign direct investment and net import in Nigeria. The study also shows that there is relationship between trade openness and net import in Nigeria.

scholarly journals The effects of public debt on foreign direct investment in South Africa (1983-2013): An empirical analysis

2016 ◽  
Vol 6 (4) ◽  
pp. 448-456
Author(s):  
Mary Oyemowo Oche ◽  
Gisele Mah ◽  
Itumeleng Pleasure Mongale
Keyword(s):  
South Africa ◽  
Foreign Direct Investment ◽  
Interest Rate ◽  
Public Debt ◽  
Direct Investment ◽  
Negative Relationship ◽  
Government Deficits ◽  
Long Run ◽  
Short Run ◽  
The Government

The political move in South Africa occurred against a setting of high government deficits. Efforts have been made over the years by the government to reduce fiscal deficit and inflation, liberalize the capital account and the financial system as well as reduce tariffs. The main objective of this study, therefore, is to empirically investigate the effect of public debt on foreign direct investment in South African for the period 1983 – 2013. The study employs a Vector Error Correction Model, which provides both the long run and short run relationships among the variables. The long run results indicate that the relationship between public debt and foreign direct investment, as well as interest rate and foreign direct investment, is positive and statistically significant, while there is an insignificant negative relationship between exchange rate and foreign direct investment. Based on the long run results, the study, thus, recommend that the level of public debt and interest rate should increase so that the level of foreign direct investment can increase in the country. However, the policy of depreciation of rand is considered inappropriate for the economy if the desire is to increase the level of foreign direct investment in the country.

The Role of Different Channels in Transmitting Monetary Policy into Output and Price in Vietnam

2015 ◽  
pp. 20-40
Author(s):  
Vinh Nguyen Thi Thuy
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Monetary Transmission ◽  
Impulse Response Functions ◽  
Short Run ◽  
The Exchange Rate ◽  
The Interest Rate ◽  
Interest Rate Channel

The paper investigates the mechanism of monetary transmission in Vietnam through different channels - namely the interest rate channel, the exchange rate channel, the asset channel and the credit channel for the period January 1995 - October 2009. This study applies VAR analysis to evaluate the monetary transmission mechanisms to output and price level. To compare the relative importance of different channels for transmitting monetary policy, the paper estimates the impulse response functions and variance decompositions of variables. The empirical results show that the changes in money supply have a significant impact on output rather than price in the short run. The impacts of money supply on price and output are stronger through the exchange rate and credit channels, but however, are weaker through the interest rate channel. The impacts of monetary policy on output and inflation may be erroneous through the equity price channel because of the lack of an established and well-functioning stock market.

Macroeconomic Determinants of Stock Market Prices in Nepal

2020 ◽  
Vol 2 (1) ◽  
pp. 56-65
Author(s):  
Bhim Prasad Panta
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Stock Market ◽  
Money Supply ◽  
Developing Economies ◽  
Annual Data ◽  
Economic Variables ◽  
Market Prices ◽  
Ardl Model ◽  
Long Run

Background: Stock market plays a crucial role in the financial system of a country. It can be viewed as a channel through which resources are properly channelized. It enables the governments and industry to raise long-term capital for financing new projects. The stock markets of developing economies are likely to be sensitive to various macro-economic factors such as GDP, imports, exports, exchange rates etc., when there is high demand on financial products, as a constituent of financial market, ultimately stock market needs to develop. Many factors can be a signal to stock market participants to expect a higher or lower return when investing in stock and one of these factors are macroeconomic variables and thus, macro-economic variables tend to effect on stock market development. Objective: This study examines the linkage between stock market prices (NEPSE index) and five macro-economic variables, namely; real GDP, broad money supply, interest rate, inflation, and exchange rate using ARDL model and to explain the behavior of the Nepal Stock Exchange Index. Methods: The ECM which is delivered from ARDL model through simple linear transformation to integrate short run adjustments with long run equilibrium without losing long run information. The analysis has been done by using 25 years' annual data from 1994 to 2019. Findings: The result suggests that the fluctuation of Nepse Index in long run is strongly associated with broad money supply, interest rate, inflation, and exchange rate. Conclusion: Though Nepalese stock market is in primitive stage, broad money supply, interest rate, inflation and exchange rate are major factors affecting stock market price of Nepal. So, policies and strategies should be made and directed taking these in to consideration. Implication: The findings of research can be helpful to understand the behavior of Nepalese stock market and develop policies for market stabilization.

scholarly journals Exchange Rate Volatility and Foreign Direct Investment

2020 ◽  
Vol 12 (3) ◽  
pp. 38
Author(s):  
Samuel Erasmus Alnaa ◽  
Ferdinand Ahiakpor
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Gross Domestic Product ◽  
Real Exchange Rate ◽  
Direct Investment ◽  
Exchange Rate Volatility ◽  
External Factors ◽  
Conditional Heteroskedasticity ◽  
Data Set

The paper seeks to determine the effect of exchange rate volatility on foreign direct investment in Ghana from 1986 to 2017. The study adopted the Generalized Autoregressive Conditional Heteroskedasticity model to fit the data set from 1986-2017. The results indicate that, previous quarter information can influence current quarter volatility in Foreign Direct Investment. Real exchange rate, gross domestic product and treasure bill rate considered as external factors, are all found to be significant. This shows that, volatility from these factors can spillover to volatility in foreign direct investment.  To ensure stable inflow of foreign direct investment, we recommend that policies should gear towards stability in the forex market and interest rate among others.

scholarly journals Exchange rate volatility and its effect on intra-East Africa Community regional trade

2021 ◽  
Vol 4 (9) ◽  
pp. 43
Author(s):  
Thomas Mosbei ◽  
Silas Kiprono Samoei ◽  
Clement Cheruiyot Tison ◽  
Edwin Kipyego Kipchoge
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
East Africa ◽  
Money Supply ◽  
Direct Investment ◽  
Structural Adjustment ◽  
Exchange Rate Volatility ◽  
Fixed Effect Model ◽  
Foreign Direct Investments ◽  
Regional Trade

East Africa Community exchange rate volatility spiraled up when the countries adopted the Structural Adjustment Policies in early 1980s. The question that remains unanswered is whether exchange rate volatility hinders or promotes trade. The objective of this study was to determine the effect of exchange rate volatility and its effect on Intra-East Africa community regional trade. Unit root tests results indicated that some of the variables were stationary at levels and on first difference, all variables were I(1). Differenced panel data was fitted into the General Autoregressive Conditional Heteroscedasticity model to measure volatility. Hausman test showed that the fixed effect model was appropriate exchange rate, money supply, population and foreign direct investment significantly determines intra-East Africa Community regional trade. It was concluded that exchange rate volatility is observable in the Intra-East Africa region and further, exchange rate, money supply, population, and foreign direct investment significantly influenced intra-EAC regional trade. It is recommended that EAC member states should formulate policies that ensures exchange rate stability in the region to reduce unpredictability of exchange rate. Policies should be enacted to guarantee adequate money supply and encourage foreign direct investments.

scholarly journals Does Monetary Policy and Foreign Direct Investment Have an Influence on the Performance of Stock Market: Further Empirical Evidence from Ghana

2020 ◽  
Vol 2 (2) ◽  
pp. 161-176
Author(s):  
Opoku Adabor ◽  
Emmanuel Buabeng
Keyword(s):  
Monetary Policy ◽  
Foreign Direct Investment ◽  
Stock Market ◽  
Direct Investment ◽  
Market Performance ◽  
Empirical Literature ◽  
Long Run ◽  
Stock Market Performance ◽  
Short Run ◽  
Positive Effect

Monetary policy, foreign direct investment, and the stock market continue to dominate in discussions in developing countries. However, the linkage between the three variables in empirical literature remains unclear. This study aims to test two separate hypotheses: Firstly, the study examines the effects of monetary policy on stock market performance in Ghana. Secondly, the study also empirically investigates the effect of foreign direct investment on stock market performance in Ghana. Autoregressive Distributed Lag (ARDL) model was employed as an estimation strategy to examine the short and long-run effects using annual time series data from 1990 to 2019. The study revealed that monetary policy rate and money supply exerts a statistically significant negative and a positive effect on stock market performance in both the long and short-run in Ghana, respectively. It was also found that foreign direct investment has significant and a positive effect on stock market performance in Ghana in both the long and short run. Total capital stock and volume traded were also found to exert significant positive and negative impacts on stock market performance both in the short and long run respectively. Based on our findings, we recommend that expansionary monetary policy will be a better option to be carried out to improve the stock market performance in Ghana. Furthermore, government and private partnership may ensure the effective management of the macroeconomic variables to attract foreign direct investment into Ghana to boost stock market performance.

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