Studies have proven that volatilities in the rates of exchange and interest influence the performance of institutions and the values of their shares. This study investigates empirically the effect of exchange rate and interest rate volatilities on stock prices of f inancial institutions listed on the Ghana Stock Exchange using monthly data spanning the period January 2000 to October 2016. The generalized autoregressive conditional heteroskedastic (GARCH) model is employed for the analysis. The results show that exchange rate volatility exerts a positive effect on stock prices whereas interest rate volatility impacts on stock prices negatively. These results imply that the trade-off between risk and return can be predicted so industry players and stakeholders can manage risk to ensure a vibrant financial market. It is also suggested that there is a need for stakeholders and policymakers to ensure that these variables are stable or the volatilities are minimized in the economy. This will go a long way to enhance the performance of the stock market activities in the country.
Baidoo, S., Ofori-Abebrese, D. & Osei, P (2020). The Effect of Exchange Rate and Interest Rate Volatilities on Stock Prices: Further Empirical Evidence from Ghana. Afribary. Retrieved from https://afribary.com/works/the-effect-of-exchange-rate-and-interest-rate-volatilities-on-stock-prices-further-empirical-evidence-from-ghana
Baidoo, Samuel Tawiah, et. al. "The Effect of Exchange Rate and Interest Rate Volatilities on Stock Prices: Further Empirical Evidence from Ghana" Afribary. Afribary, 18 Feb. 2020, https://afribary.com/works/the-effect-of-exchange-rate-and-interest-rate-volatilities-on-stock-prices-further-empirical-evidence-from-ghana. Accessed 24 Dec. 2024.
Baidoo, Samuel Tawiah, Dr. (Mrs) Grace Ofori-Abebrese and Peter Osei . "The Effect of Exchange Rate and Interest Rate Volatilities on Stock Prices: Further Empirical Evidence from Ghana". Afribary, Afribary, 18 Feb. 2020. Web. 24 Dec. 2024. < https://afribary.com/works/the-effect-of-exchange-rate-and-interest-rate-volatilities-on-stock-prices-further-empirical-evidence-from-ghana >.
Baidoo, Samuel Tawiah, Dr. (Mrs) Grace Ofori-Abebrese and Peter Osei . "The Effect of Exchange Rate and Interest Rate Volatilities on Stock Prices: Further Empirical Evidence from Ghana" Afribary (2020). Accessed December 24, 2024. https://afribary.com/works/the-effect-of-exchange-rate-and-interest-rate-volatilities-on-stock-prices-further-empirical-evidence-from-ghana