The effect of the main variable of Money Market on stock price index in Iran

Abstract

The Stock Exchange is a private sector savings and liquidity fund to fund long-term investment projects. The indicators of this market are influenced by several factors, one of which are economic variables. Banks are also one of the most important investors in the financial market. In this study, the effect of exchange rate, bank interest rate, liquidity and inflation rate on stock price index using time series data of 1978-1988 and using equation system model of four equations of the stock price index, inflation rate, profit rate Deposits, and facility interest rates were estimated using the three-stage least squares method. The results showed that the effect of the exchange rate, deposit interest rate and positive liquidity volume and the effect of inflation rate on stock price index was negative. Other equations have been estimated because of the relationship between the bank interest rate and inflation rate, and the results show that both deposit interest rate and facility interest rate have a positive relationship with the inflation rate