The Impact of Inflation and Monetary Policy Shocks on Stock Market Performance in Zimbabwe

Bachelor Thesis , 2023 , 80 Pages , Grade: Distinction

Economics - Finance

This study examines the impact of inflation and monetary policy shocks on stock market performance in Zimbabwe from 2000 to 2022. The study analyzes the relationship between different variables' regression using data obtained from the Zimbabwe Stock Exchange (ZSE) returns, inflation rates obtained from the Zimbabwe National Statistics Agency (ZIMSTAT), and interest rates obtained from the Reserve Bank of Zimbabwe. In this regression, ZSE returns are the dependent variable while inflation and interest rates are the independent variables. The research findings suggest that inflation has a negative impact, while monetary policy shocks have a positive impact on stock market performance in Zimbabwe.

The study finds that inflation has a significant and persistent negative effect on stock market returns, with a one standard deviation shock in inflation leading to a significant decline in stock market returns. Moreover, the study identifies that monetary policy shocks, such as changes in interest rates, have a significant impact on stock market returns, but the effect is less pronounced compared to inflation in Zimbabwe. Furthermore, the study examines the transmission channels through which monetary policy shocks affect the stock market in Zimbabwe. The results suggest that changes in interest rates affect the stock market mainly through their impact on inflation expectations and exchange rates. This highlights the importance of considering both monetary and macroeconomic factors when analyzing the impact of monetary policy on the stock market in Zimbabwe. The study concludes that high inflation rates and frequent monetary policy interventions have a detrimental effect on stock market performance in Zimbabwe.

The findings of this research are relevant to investors, policymakers, and analysts who are interested in understanding the relationship between inflation, monetary policy, and stock market performance in Zimbabwe. The study also analyzed the impact of GDP and exchange rate as control variables on stock market performance. The results suggested that changes in exchange rates have a negative impact on stock market returns GDP have a negative impact. The joint impact of inflation and monetary policy shocks was also found to be significant, indicating that both variables affect stock returns.

Inhaltsverzeichnis (Table of Contents)

• CHAPTER I: INTRODUCTION
• 1.0 Introduction
• 1.1 Background to the study.
• 1.1.1 Stock Market Performance in Zimbabwe
• 1.2 Problem Statement...
• 1.3 Research Objectives
• 1.4 Research Questions........
• 1.5 Significance of the Study..
• 1.5.1 To the Researcher
• 1.5.2 To the University
• 1.5.3 To Policy Makers and investors.....
• 1.6 Scope of the Study.
• 1.7 Assumptions of the Study....
• 1.8 Limitations of the Study.
• 1.9 Organisation of the study..
• CHAPTER II: LITERATURE REVIEW..
• 2.0 Introduction
• 2.1 Definition of terms....
• 2.1.1 Stock market

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This research project aims to investigate the impact of inflation and monetary policy shocks on stock market performance in Zimbabwe between 2000 and 2022. The study utilizes data from the Zimbabwe Stock Exchange (ZSE), Zimbabwe National Statistics Agency (ZIMSTAT), and the Reserve Bank of Zimbabwe to examine the relationship between inflation, monetary policy, and stock market returns.

• The relationship between inflation and stock market performance in Zimbabwe.
• The impact of monetary policy shocks on stock market performance in Zimbabwe.
• The transmission channels through which monetary policy shocks influence the stock market in Zimbabwe.
• The combined impact of inflation and monetary policy shocks on stock market returns.
• The influence of macroeconomic factors, such as GDP and exchange rate, on stock market performance in Zimbabwe.

Zusammenfassung der Kapitel (Chapter Summaries)

Chapter I introduces the study, providing background information on stock market performance in Zimbabwe, outlining the problem statement, research objectives, and the significance of the research. The chapter also discusses the scope, assumptions, limitations, and organization of the study.

Chapter II delves into a comprehensive literature review, providing definitions of key terms, such as "stock market," and exploring existing research on the relationship between inflation, monetary policy, and stock market performance. This chapter serves to establish a theoretical framework for the study and to identify relevant research gaps.

Schlüsselwörter (Keywords)

The core concepts explored in this research project include inflation, monetary policy, stock market performance, Zimbabwe, exchange rate, and GDP. The study focuses on examining the impact of inflation and monetary policy shocks on stock market performance, exploring the transmission mechanisms of monetary policy, and analyzing the role of macroeconomic factors in shaping stock market dynamics within the context of Zimbabwean economic environment.

• College: National University of Science & Technology Zimbabwe (Finance)
• Grade: Distinction
• Author: Mkhululi Ncube (Author)
• Publication Year: 2023
• Pages: 80
• Catalog Number: V1473009
• ISBN (PDF): 9783389023785
• ISBN (Book): 9783389023792
• Language: English
• Tags: impact, inflation, monetary, policy, shocks, stock, market, performance, zimbabwe