Abstract
How is stock market price volatility affected, and what is the nature of the impact that macroeconomic variables do on the stock market price direction? The main objective of this study is to investigate the impact of some selected macroeconomic variables (inflation rate (INR), interest rate (IR), economic growth rate (EGR), and foreign investment (FI)) on Amman Stock Exchange (ASE) fluctuation for the period 1999–2018. The information is based on the annual data published by industrial companies listed at ASE. The study adopted a descriptive-analytical approach, also simple and multiple linear regression analysis was employed for the mentioned purpose (Nurfadilah & Samidi, 2017). The results revealed that there is no statistically significant impact of INR, IR, EGR, and FI collectively on ASE performance (Niewińska, 2020). Individually, the results indicated that there is a statistically significant impact of all variables (INR, IR, EGR, and FI) on ASE performance. Additionally, the results concluded that foreign investment, portrayed the highest impact factor on ASE performance, followed by a change in average interest rate, then inflation rate, and the least impact attributes to the economic growth rate. Finally, the research recommends that Jordanian banks should reduce the lending interest rate to enhance investment in securities and improve economic growth rate, also Jordanian authorities should encourage foreign direct and indirect investment and make more efforts to attract more foreign investment, either in the form of tax incentives or by extending finance at low-interest rates.
Highlights
Investment decision in the stock market involves risk-taking; the analysis of stock market price behaviour is closely related with the aim of providing investors with the necessary data and information to endorse the right investment decision at the right time and in the right place (Al Qaisi, Tahtamouni, & Al-Qudah, 2016)
How is stock market price volatility affected, and what is the nature of the impact that macroeconomic variables do on the stock market price direction? The main objective of this study is to investigate the impact of some selected macroeconomic variables (inflation rate (INR), interest rate (IR), economic growth rate (EGR), and foreign investment (FI)) on Amman Stock Exchange (ASE) fluctuation for the period 1999–2018
The main objective of the study is to examine the impact of inflation rate (INF), interest rate (IR), GDP, and foreign investment (FI) on the changes that occur to the ASE index
Summary
Investment decision in the stock market involves risk-taking; the analysis of stock market price behaviour is closely related with the aim of providing investors with the necessary data and information to endorse the right investment decision at the right time and in the right place (Al Qaisi, Tahtamouni, & Al-Qudah, 2016). For financial markets to play an effective economic role in pooling various savings the stock exchange prices must be intrinsic in their pricing, this does not happen unless companies’ relevant information is available and is constantly reflected in their stock price (Sharif, Purohit, & Pillai, 2015). This will enhance companies’ and individuals’ ability to invest, produce and expand to cover areas of the market with high profitability, the stock market fulfills its proposed economic role in directing savings and in improving economic and social development (Moqbel, Al-Rjoub, & AL-Shwiyat, 2015). Amman Stock Exchange (ASE) performance was examined in-depth, which reflected a sharp fluctuation during the period 1999–2018 during which the financial crisis has erupted and affected the world economy as a whole (Al-Abdallah, Al-Jarayesh, & Ibrahim, 2018)
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