The Effects of Monetary Policy on Stock Market Performance: A Cross-Country Analysis

2011 ◽  
Author(s):  
Francis O.F. Aziza
Keyword(s):  
Monetary Policy ◽  
Stock Market ◽  
Market Performance ◽  
Stock Market Performance ◽  
Country Analysis ◽  
Cross Country

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.

scholarly journals Stock market implications of Fed's balance sheet size

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asif M. Ruman
Keyword(s):  
Monetary Policy ◽  
Stock Market ◽  
Central Bank ◽  
Market Performance ◽  
Balance Sheet ◽  
Return Predictability ◽  
Unconventional Monetary Policy ◽  
Content Type ◽  
Market Return ◽  
Stock Market Performance

PurposeConsidering the relationship between the central bank balance sheet and unconventional monetary policy after the 2008 financial crisis, it is crucial to see how the unconventional monetary policy, given near-zero interest rates, affects future stock market performance. This paper analyzes the impact of the Fed's balance sheet size on stock market performance.Design/methodology/approachTo analyze the Fed's balance sheet size's long-term stock market implications, this paper uses the asset pricing framework of market return predictability such as Ordinary least squares (OLS) and Generalized method of moments (GMM) analysis.FindingsFindings in this paper suggest that the Fed's balance sheet size, deflated by asset market wealth, presents evidence of return predictability during 1926–2015 that is robust against standard controls. These results can be explained through the redistribution of risk and the wealth channels of monetary policy transmission. The changing balance sheet size of a central bank (1) affects systemic risk, yields and expectations and (2) signals the future direction of monetary policy and thus economic outlook.Research limitations/implicationsThe main implication of these findings is that policymakers should avoid a severe imbalance between a central bank's balance sheet size and assets market wealth.Originality/valueThe empirical evidence in this paper documents a century-old relation between the Fed's balance sheet size and US stock market return using the Fed's balance sheet data for the last 100 years and stock market returns from the Center for research in security prices (CRSP) database.

scholarly journals A cross-country and country-specific modelling of stock market performance, bank development and global equity index in emerging market economies: A case of BRICS countries

PLoS ONE ◽  
2020 ◽  
Vol 15 (11) ◽  
pp. e0240482
Author(s):  
Ebere Ume Kalu ◽  
Augustine C. Arize ◽  
Okoro E. U. Okoro ◽  
Florence Ifeoma Onaga ◽  
Felix Chukwubuzo Alio
Keyword(s):  
Stock Market ◽  
Emerging Market ◽  
Market Performance ◽  
Market Development ◽  
Stock Market Development ◽  
Brics Countries ◽  
Long Run ◽  
Stock Market Performance ◽  
Cross Country ◽  
Equity Index

This study investigated in cross-country and panel form the interactions of bank development, stock market development and global equity index, focusing on the BRICS countries covering the period 1990 to 2018. We found a bidirectional causation between bank development (CPSGDP) and stock market performance as proxied by the depth of the markets (MCAPGDP) in the BRICS countries. Cointegration was also found using the panel cointegration framework and the bounds test for the ARDL estimators. This largely proves that a long-run relationship of both direct and reverse nature exists between bank development and stock market performance. For the bank development and market performance models respectively, all the error-correction terms were found to be negatively significant, indicating that they both share dynamic profile and adjust appreciably to deviations from equilibrium between the short run and the long run. The global equity index showed that stock market development interacts more with the global financial environment than bank development in the BRICS countries. Our findings support the complementarity and coevolution hypothesis in the stock market and bank development nexus.

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