The Relationship between the Money Market Rates and the Common Stock Returns: The Malaysian Experience

Jabatan Kewangan
Fakulti Pengurusan Perniagaan
Universiti Kebangsaan Malaysia
43600 UKM Bangi
Selangor DE


Abstract

The relationship between monetary developments and common stock returns has been the focus ofa considerable amount of research in recent years. This paper addresses the relationship between the money market rates and the common stock returns in Malaysia. Statistical analyses were conducted to provide emprrical linkage between the two market; i.e., money market and capital market. The results indicated that no significant relationship exist between money market rates movement and common stock returns. However, the inverse relationship between the two variables was traced in the Malaysian market. Among al/ money market rates, the interbank rates offer some predictive power as it is commcmly used as liquidity barometer in the Malaysian financial market. This study also found evidence of disintermediation, i.e., outflow offund from the banking sector into direct capital market due to changing level Q/ interest rate.

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Citation

Ghazali, N. A. (1992). The Relationship between the Money Market Rates and the Common Stock Returns: The Malaysian Experience. Jurnal Pengurusan, 11, 3–13.

@article{ghazali1992relationship,
  title={The Relationship between the Money Market Rates and the Common Stock Returns: The Malaysian Experience},
  author={Ghazali, Noor Azlan},
  journal={Jurnal Pengurusan},
 

volume={11},
  number={},
  pages={3—13},
  year={1992},
  doi={},
  publisher={Penerbit UKM},
}

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11 (1992) 3 – 13

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