The Influence of Interest Rates and Stock Prices on Investments
(2017) NEKN02 20171Department of Economics
- Abstract
- Investments are essential to any economy. Therefore, governments aim to increase the level of
total investments done within a country. Investments improve the economy and the productivity
of the country. For this reason, it is important to understand which factors can influence
investments on a national scale. The primary aim of this study is to investigate factors that could
reasonably be expected to have an impact and analyse their effects on gross fixed capital
formation, foreign direct investment inflow and foreign direct investment outflow. The factors
being investigated are short term real interest rate, stock market performance and a range of
other variables used as control variables. The analysis was conducted using... (More) - Investments are essential to any economy. Therefore, governments aim to increase the level of
total investments done within a country. Investments improve the economy and the productivity
of the country. For this reason, it is important to understand which factors can influence
investments on a national scale. The primary aim of this study is to investigate factors that could
reasonably be expected to have an impact and analyse their effects on gross fixed capital
formation, foreign direct investment inflow and foreign direct investment outflow. The factors
being investigated are short term real interest rate, stock market performance and a range of
other variables used as control variables. The analysis was conducted using data from 43
countries over the period of 1980-2015. This study is a quantitative and panel data was used.
The results showed that, as short term real interest rate increases, gross fixed capital formation
and foreign direct investment outflow decrease. Stock prices, on the other hand, negatively
affect foreign direct investment inflow and positively affect foreign direct investment outflow,
while having no significant effect on gross fixed capital formation. In a final step, countries
were divided into two groups based on their income levels, “high” and “middle”. The results
showed that the stock market has a greater impact on investments in middle income countries,
while the interest rate has a greater impact on investments in high income countries. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8915115
- author
- Aidarkhanova, Zhaniya LU
- supervisor
-
- Hans Byström LU
- organization
- alternative title
- The Impact of Short Term Real Interest Rates and Stock Prices on Gross Fixed Capital Formation and Foreign Direct Investment
- course
- NEKN02 20171
- year
- 2017
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- panel data, interest rate, stock market, investments, gross fixed capital formation, foreign direct investment
- language
- English
- id
- 8915115
- date added to LUP
- 2017-06-14 13:04:54
- date last changed
- 2017-06-14 13:04:54
@misc{8915115, abstract = {{Investments are essential to any economy. Therefore, governments aim to increase the level of total investments done within a country. Investments improve the economy and the productivity of the country. For this reason, it is important to understand which factors can influence investments on a national scale. The primary aim of this study is to investigate factors that could reasonably be expected to have an impact and analyse their effects on gross fixed capital formation, foreign direct investment inflow and foreign direct investment outflow. The factors being investigated are short term real interest rate, stock market performance and a range of other variables used as control variables. The analysis was conducted using data from 43 countries over the period of 1980-2015. This study is a quantitative and panel data was used. The results showed that, as short term real interest rate increases, gross fixed capital formation and foreign direct investment outflow decrease. Stock prices, on the other hand, negatively affect foreign direct investment inflow and positively affect foreign direct investment outflow, while having no significant effect on gross fixed capital formation. In a final step, countries were divided into two groups based on their income levels, “high” and “middle”. The results showed that the stock market has a greater impact on investments in middle income countries, while the interest rate has a greater impact on investments in high income countries.}}, author = {{Aidarkhanova, Zhaniya}}, language = {{eng}}, note = {{Student Paper}}, title = {{The Influence of Interest Rates and Stock Prices on Investments}}, year = {{2017}}, }