Investigating the Influence of Economic and Financial Factors on the Share Market

Abstract

This study investigates the interconnection and influence of factors including Financial and Macroeconomic on Share Market Returns. It aims to comprehend how a range of factors influence diverse economies due to varying market conditions and supply-demand dynamics. Employing a quantitative approach grounded in the Post Positivism Paradigm, this study employs Jonas & Mishkin (2004) monetary policy mechanisms as the conceptual framework. The PSX-100 index serves as a substitution for evaluating share market returns, utilizing data spanning a decade from June 2012 to July 2023. Correlation Analysis unveils a negative linkage between Inflation, Interest rates, and Exchange rates, while demonstrating a positive correlation between Industrial Production and share market returns. This investigation furnishes valuable insights for investors keen on comprehending the risk-return dynamics in share market investments, while also establishing a robust foundation for future investigations into related domains.