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Badla Financing, Stock Returns and Volatility: The Case Study of Karachi Stock Exchange

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  • Rashid, Abdul
  • Ahmad, Shabbir

Abstract

Using badla financing as a measure of leverage we examine both temporal and contemporaneous links among badla financing, stock returns and market volatility. We find that the market volatility is significantly and positively related to the change in badla financing and to past market returns. We also observe a significantly positive temporal causation between prior market returns and both badla financing as well as stock price volatility.

Suggested Citation

  • Rashid, Abdul & Ahmad, Shabbir, 2008. "Badla Financing, Stock Returns and Volatility: The Case Study of Karachi Stock Exchange," MPRA Paper 30487, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:30487
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Badla Financing; Stock Returns; Market Volatility; Call Money Rate; Exchange Rate;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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