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VOL. 11, ISSUE 8 (2024)
Impact of interest rate changes on stock market
Authors
Subhash Chawla, Nilesh Raman, Humanshu Sahu, Brandon Victor Dsouza, Anmol Agrawal
Abstract
This paper examines the intricate relationship between interest rate
changes and stock market performance, a subject of significant interest to
economists, investors, and policymakers. Interest rates, primarily influenced
by central bank policies, play a crucial role in shaping economic activities by
affecting borrowing costs, consumer spending, and investment decisions.
Consequently, changes in interest rates have direct and indirect effects on the
stock market, which is a barometer of economic health and investor sentiment.
The study explores both theoretical frameworks and empirical data to analyse
how interest rate fluctuations impact stock prices and market volatility. Theoretically,
interest rate changes influence the cost of capital, corporate profitability,
and investor behaviour. Higher interest rates increase borrowing costs for
companies, potentially leading to lower profits and reduced stock prices.
Conversely, lower interest rates can stimulate economic growth by making
borrowing cheaper, which may enhance corporate earnings and boost stock
valuations.
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Pages:105-109
How to cite this article:
Subhash Chawla, Nilesh Raman, Humanshu Sahu, Brandon Victor Dsouza, Anmol Agrawal "Impact of interest rate changes on stock market". International Journal of Multidisciplinary Research and Development, Vol 11, Issue 8, 2024, Pages 105-109
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