Abstract
Internal (firm-specific) and external (macroeconomic) determinants of stock price fluctuations are vital for investors seeking to invest their money in a firm’s stocks. Thus, the main aim of this study is to explore macroeconomic and firm-specific factors that influence stock price fluctuations for all conventional banks in Jordan in 2010–2019. Ordinary least squares multiple regression (panel data) is applied for data analysis. The results report that trading volume (TV), dividend yield (DY), and Gross Domestic Product (GDP) have a positive effect on stock price volatility, while stock price volatility is statistically negatively affected by return on assets (ROA), dividend payout ratio (DPR), and price-earnings ratio (PE). On the other hand, money supply (MS) does not affect stock price volatility. Paying more dividends can reduce stock risk and, in turn, reduce stock price volatility. The findings can benefit current and potential investors, firm managers, brokers, dealers, portfolio managers, regulatory bodies, policy makers, and researchers.
Highlights
There is a relationship between the financial sector and economic development and economic growth in all countries
The results report that trading volume (TV), dividend yield (DY), and Gross Domestic Product (GDP) have a positive effect on stock price volatility, while stock price volatility is statistically negatively affected by return on assets (ROA), dividend payout ratio (DPR), and price-earnings ratio (PE)
The purpose of this paper is to identify the determinants of stock price volatility in Jordan and see whether the results confirm or contradict the previous results by answering the following question: What are the determinants of stock price volatility for all conventional banks in Jordan?
Summary
There is a relationship between the financial sector (financial institutions) and economic development and economic growth in all countries. In Jordan, the size of the banking sector is large relative to the Jordanian economy, where the ratio of banks’ total assets to GDP is 179.4% at the end of 2020, indicating the importance of banks to the Jordanian economy (Association of Banks in Jordan, 2020).
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