54
CHAPTER 5
SUMMARY DISCUSSION AND CONCLUSION
5.0 Introduction
This chapter includes 4 parts, part one is summary, the study will summary the
result that how does the impact of macroeconomic factors on banking industry stock
return. Part two
is limitation of this study, part three is recommendation and future
research and part four is conclusion for all of this paper.
5.1 Summary
This study undertakes a research to seek the impact of the macroeconomic
variables namely inflation (INF), exchange rate (EX), interest rate (INT) and money
supply (M2) on Chinese banking industry stock return. The data is collected over the
period of Sep. 2007 to Jun. 2012 and Genelized Least Square (GLS) method is
applied to examine whether the banking industry stock
return is sensitive to the
macroeconomic variables changes.
At the beginning of the estimation, descriptive analyses have been done to all
dependent and independent variables. From the result, we can see that these four
macroeconomic factors have a relationship with banking industry stock return. Such
as the inflation rate has a positive but insignificant impact on the banking industry
stock return, because when the inflation rate increase,
the price of the stock also
increases. For the investors, while inflation affects the prices, stock price will increase,
causing an increase in the amount of dividends, then the shareholders will get more
return. According to the Fisher hypothesis, stocks which represent
a claim against real
assets of the company, may serve as a hedge against inflation. When the expected
55
inflation is pronounced, investors would sell financial assets in exchange for real
assets. If that occurs, the prices of stocks in nominal terms should reflect fully the
expected inflation and hence the relationship between
the two variables should be
positive.
Based on the result, it is concluded that exchange rate is the most significant
variable in explaining the fluctuation of Chinese banking industry stock return though
it gives positive effect on the stock return. This shows that depreciation of home
currency (RMB) against the US Dollar will cause banking industry stock return to
drop. Appreciation of home currency (RMB) against the US Dollar will cause
banking industry stock return to goes up. Because if
the home currency appreciates, it
will cause hot money flow into the stock money, the investors will wait a good chance
to get more returns from the market. For money supply (M2), there is a positive and
insignificant impact on the banking industry stock return. And the interest rate has a
negative and significant impact on the banking industry stock return, due to the
increase
the interest, people will saving money more than do the investment. It is
found that the changes of market return are statistically significant and positively
affecting the banking industry stock returns in overall.
Regarding the Shanghai stock market return and Shenzhen stock market return
as control variables, there is a very strong significant impact of both these two stock
market returns on the banking industry stock return. It indicates that in Chinese stock
market, banking sector return is depended on the market returns.
If market return
increase, the banking stock return also increase, if market return decrease, the banking
stock return also decrease, it has a positive relationship between them.
Dostları ilə paylaş: