Advanced

The Influence of Interest Rates and Stock Prices on Investments

Aidarkhanova, Zhaniya LU (2017) NEKN02 20171
Department 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:
author
Aidarkhanova, Zhaniya LU
supervisor
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
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},
  keyword      = {panel data,interest rate,stock market,investments,gross fixed capital formation,foreign direct investment},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Influence of Interest Rates and Stock Prices on Investments},
  year         = {2017},
}