The Impact of Macroeconomic Variables on Stock Market Performance: A Case of Malaysia
Journal Title: Edelweiss Applied Science and Technology - Year 2018, Vol 2, Issue 1
Abstract
The importance of the stock market in the development of the economy of a country can be directly linked to the governance, appropriate and effective regulatory framework designed by the policymakers. Stock market plays a very significant role in promoting capital formation and sustaining the economic growth of a country. It efficiently allocates scarce resources which are used to finance different sort of projects, leading to the prosperity and growth of the economy. Moreover, it also serves as a vehicle for risk diversification associated with projects, which helps to minimize the uncertainty regarding investment returns. Olweny and Kimani (2011) have argued that stock market facilitates the investment of surplus funds into additional financial instruments that better match their liquidity preference and risk appetite. According to Nordin & Nordin (2016), at the end of 2010 the Malaysian stock market capitalization and debt outstanding stood at 165% and 97% of nominal GDP respectively. This figures show that the Malaysian capital market is quite big relatively to the Malaysian economy. Therefore, taking into account the size of the Malaysian capital market, it is possible that this market could significantly contribute to the economic growth of the country.
Authors and Affiliations
Dercio Fernando Filipe Chauque
Keywords
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