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Analysis of the Impact of Economic Growth and Asymmetric Information of Capital Market on Investors' Confidence

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  • Moosavi , Seyed Abdollah

    (Isfahan (Khorasgan) Branch, Islamic Azad University)

  • Ranjbar , Homayoun

    (Isfahan (Khorasgan) Branch, Islamic Azad University)

  • Sameti , Majid

    (Isfahan University)

  • Sharifi-Renani , Hossein

    (Isfahan (Khorasgan) Branch, Islamic Azad University)

Abstract

The stock exchange, as a part of the capital market, in case of necessary conditions, can mobilize national capital and direct it towards economic growth. A secure environment where managers are working towards stockholders for investment and information asymmetry is considered to be the features of a good business. This research seeks to investigate whether information asymmetry of the financial market and macroeconomic growth can affect investors’ confidence ration. Our model is estimated using MGARCH for seasonal data of the stock market in Iran and the real GDP during the period from 1991-2016. The findings of the research have shown a significant effect of macroeconomic growth and information asymmetry of the financial market on the investors’ confidence. There is also a two-way gradient relationship between the information asymmetry and the confidence of investors in the short run. There is a cointegration relationship between these three variables.

Suggested Citation

  • Moosavi , Seyed Abdollah & Ranjbar , Homayoun & Sameti , Majid & Sharifi-Renani , Hossein, 2019. "Analysis of the Impact of Economic Growth and Asymmetric Information of Capital Market on Investors' Confidence," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 14(1), pages 41-62, January.
  • Handle: RePEc:mbr:jmonec:v:14:y:2019:i:1:p:41-62
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    References listed on IDEAS

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    More about this item

    Keywords

    Information Asymmetry; Investors’ Confidence; Total Stock Price Index; Economic Growth; Multivariate GARCH;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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