Linkages Between Stock Market Performance and Macroeconomic Variables: A Panel Study of Growth Potential Economies

Riaz Ahmad, Sundus Waqar, Shmrez Ali, Ahmad Nawaz

This paper investigates the relationship between the stock market and macro-economic environment of growth potential countries. The “All Share Price Index” is used to proxy the stock market and for macroeconomic environment, this paper uses money supply, saving rate, government general final consumption expenditures, domestic credit provided by the financial sector, foreign direct investment, and exchange rate. The study covers the time span from 1991 to 2015 on an annual basis and consists of ten (10) growth potential economies. These countries are also known as 3G economies namely Bangladesh, China, Pakistan, India, Sri Lanka, Brazil, Indonesia, Philippines, Russia, and Vietnam. Moreover, the study concludes that most of the macroeconomic variables reflect significant and direct relationship toward the stock market. Therefore, macroeconomic policy variables can be used to influence the stock market.

Volume 12 | Issue 2

Pages: 3482-3494

DOI: 10.5373/JARDCS/V12I2/S20201469