The influence of inflation and other selected macroeconomic variables on stock returns of financial and non-financial firms at the Dar es Salaam stock exchange: 2010-2015

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Date
2016
Journal Title
Journal ISSN
Volume Title
Publisher
University of Dar es Salaam
Abstract
This study empirically compares the influence of inflation and other selected macroeconomic variables on stock returns of financial and non financial firms listed at the Dar-es-Salaam Stock Exchange for the period of January 2010 to December 2015. The sample used in this study contains twenty two firms both financial and non financial firms. The study employed Panel data analysis to analyze the influence of inflation and other key macroeconomic variables on stock returns of the two categories of firms. The Breusch –Pagan’s (1980) Langrange multiplier (LM) test, F-test and Chow testwere applied to identify whether fixed effect, random effect or pooled OLS model was appropriate. The test revealed that the pooled OLS was appropriate. The results show that inflationary pressures and exchange rate depreciation affect negatively stock returns of non financial firms more than stock returns of financials firms. Interest rate was found to have a positive influence on stock returns of financial firms’ more than stock returns of non financial firms. Money supply was found to have an insignificant role in influencing stock returns of either group of firms. The results of this study highlight the role the Government has to play so as to controlinflation and other macroeconomic variables in the economy in order to provide favorable conditions for the stock exchange to develop and boost confidence to investors participating in the equity market.
Description
Available in print form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HG229.T34J63)
Keywords
Inflation(Finance), Dar es Salaam Stock exchange, Tanzania
Citation
John, S. (2016) The influence of inflation and other selected macroeconomic variables on stock returns of financial and non-financial firms at the Dar es Salaam stock exchange: 2010-2015, Master dissertation, University of Dar es Salaam, Dar es Salaam