Inflation and Financial Market Performance: What Have We Learned in the Last Ten Years?
53 Pages Posted: 2 Nov 2007
Date Written: December 2003
Abstract
The last decade has witnessed a great deal of theoretical and empirical research on the relationships between inflation, financial market performance, and economic growth. This paper provides a survey of that literature and presents new cross-country empirical results on this topic. We find that inflation is negatively associated with banking industry size, real returns on financial assets, and bank profitability. We also discover a positive relationship between asset return volatility and inflation.
Keywords: inflation, financial markets, economic growth, banking, financial assets
JEL Classification: E40, E44, O16
Suggested Citation: Suggested Citation
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