Impact of Macroeconomic Variables on Stock Market Returns: A Case of Karachi Stock Exchange
13 Pages Posted: 24 Mar 2015 Last revised: 26 Mar 2015
Date Written: March 22, 2015
Abstract
The aim of this paper is to investigate the linkage between macroeconomic variables (inflation rate, exchange rate and interest rate) on stock market returns in Pakistan. We used the Pakistan Karachi stock exchange 100 index as a proxy to represent the stock market returns and the interest rate, inflation rate, and exchange rate were used as the macroeconomic variables. Secondary data was collected from the period of January 2007 to December 2012. A Multiple Linear Regression was performed for the purpose of data analysis. The study showed that there is weak connection between macroeconomic variables and stock market returns. The research validates the findings of earlier studies as well as conclusions and recommendations are discussed.
Keywords: Macroeconomic Variables, Exchange rate, Inflation rate, Interest rate, Stock market returns, Stock Exchange, Pakistan.
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