THE IMPACT OF INFLATION ON STOCK PRICE IN SELECTED AFRICAN COUNTRY
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Date
2025-06-03
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A.A.U
Abstract
The study investigating the impact of inflation on stock price in selected eight African countries,
Egypt, Morocco, Tanzania, Kenya, Ghana, South Africa, and Botswana span from 2008 to 2023.
The study employed secondary data. The study used panel Auto-regressive Distributed Lag
(ARDL) model estimated via pooled mean group (PMG) approach. The study examined the
short-run and long-run effect of inflation on stock price as well as other macroeconomic variable
as a control variable. Results from the study indicate that inflation has a positive and
significance long-run impact on stock price. This also suggests that equity in these markets can
serve as a hedge against inflation which supports the fisher effect hypothesis. In contrast shortrun
effect of inflation varies significantly across the country. Among those, South Africa, Egypt,
Nigeria and Ghana, has positive and significant effect on stock price. This indicates the presence
of country specific effect. Broad money supply shows a significant and positive impact on stock
price in long-run, in contrast gross domestic product growth rate exhibits a significant and
negative impact on stock price. However, there is no significant relationship between deposit
interest rate and stock price. The findings also recommend to policy maker emphasizes the need
of macroeconomic stability, country specific investment strategy, and for investor may use the
information invest in safe investment environment.
Key words: Inflation, Stock price, Panel ARDL, PMG estimation, Inflation hedge, Africa stock
market