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Impact of Interest Rate on Stock Market Returns: A Study of the Karachi Stock Exchange

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  • Aamir Iqbal Ghazanvi
  • Muhammad Usman Akram

Abstract

This study investigates the impact of interest rates on stock market returns, focusing on the Karachi Stock Exchange (KSE) from 1997 to 2010. The analysis incorporates macroeconomic variables such as exchange rates, the industrial production index, and behavioural factors like investor sentiment. Descriptive statistics and correlation analysis provide foundational insights into the dataset, while unit root and stationarity tests ensure robust econometric modelling. The revised regression approach, utilizing differenced data, confirms a significant negative relationship between interest rates and stock market returns. The findings align with global trends but underscore the unique characteristics of emerging markets, offering valuable implications for policymakers and investors.

Suggested Citation

  • Aamir Iqbal Ghazanvi & Muhammad Usman Akram, 2025. "Impact of Interest Rate on Stock Market Returns: A Study of the Karachi Stock Exchange," International Journal of Business and Management, Canadian Center of Science and Education, vol. 20(2), pages 1-94, August.
    • Handle: RePEc:ibn:ijbmjn:v:20:y:2025:i:2:p:94
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    References listed on IDEAS

    as
    1. Cavusgil, S. Tamer, 2021. "Advancing knowledge on emerging markets: Past and future research in perspective," International Business Review, Elsevier, vol. 30(2).
    2. Rui Yang & Xin An & Yingwen Chen & Xiuli Yang, 2023. "The Knowledge Analysis of Panel Vector Autoregression: A Systematic Review," SAGE Open, , vol. 13(4), pages 21582440231, December.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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