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Dual Perspective of Inflation toward Market Development

Author

Listed:
  • Muhammad Shaukat Malik
  • Mustabsar Awais
  • Waqar-ul-hassan
  • Faisal Hayat
  • Shahbaz Hussain
  • Aisha Khursheed

Abstract

Stock markets are reflector of trade and economic prosperity across the globe, it comprised of multiple physical and mental components. Economists featured investors and their handsome cash balances among fundamental elements of capital markets. Financial experts along with practitioners developed economic models to engage shareholders by portraiting historical performance and future banefits of securities. Present study attempted to investigate the potential of inflation rate for casuing market returns under the concept of Ross (1976) pricing theory. CPI is used as proxy of inflation and KSE returns for measuring securities behaviours. Low inflationary (2000-2004) and High inflationary (2010-2014) durations as sample periods are privileged to empirically examine twofold intensity of CPI toward index of Pakistani markets. Linear regression analysis declared inflation rate as poor model for estimation of capital market returns, furthermore CPI resulted significant as well as insignificant casual relationship with positive and negative intensity toward KSE returns.

Suggested Citation

  • Muhammad Shaukat Malik & Mustabsar Awais & Waqar-ul-hassan & Faisal Hayat & Shahbaz Hussain & Aisha Khursheed, 2016. "Dual Perspective of Inflation toward Market Development," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(3), pages 225-231, March.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:3:p:225-231
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    References listed on IDEAS

    as
    1. Isma Zaighum, 2014. "Impact of Macroeconomic Factors on Non-financial firms Stock Returns: Evidence from Sectorial Study of KSE-100 Index," Journal of Management Sciences, Geist Science, Iqra University, Faculty of Business Administration, vol. 1(1), pages 35-48, March.
    2. Farid Ullah & Ijaz Hussain & Abdur Rauf, 2014. "Impacts of Macroeconomy on Stock Market: Evidence from Pakistan," International Journal of Management and Sustainability, Conscientia Beam, vol. 3(3), pages 140-146.
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    Cited by:

    1. Waqar-ul-Hassan & Zeeshan Hasnain & Shahbaz Hussain, 2017. "Evaluating the Effectiveness of Asset Pricing Model before, during and after Financial Crisis 2008: Evidence from Karachi Stock Exchange," Business and Economic Research, Macrothink Institute, vol. 7(1), pages 177-188, June.
    2. Stahl, B.C. & Andreou, A. & Brey, P. & Hatzakis, T. & Kirichenko, A. & Macnish, K. & Laulhé Shaelou, S. & Patel, A. & Ryan, M. & Wright, D., 2021. "Artificial intelligence for human flourishing – Beyond principles for machine learning," Journal of Business Research, Elsevier, vol. 124(C), pages 374-388.

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    More about this item

    Keywords

    Healthy investors; capital markets; financial models; securities returns and CPI;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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