The Impact of Interest Rate & Inflation Rate on the Stocks Returns in Abu Dhabi Securities Exchange (ADX): Evidence from United Arab Emirates

Abstract

This study aims to discover the Impact of Interest Rate & Inflation Rate on the Stocks Returns in Abu Dhabi Securities Exchange (ADX). The researchers take approximately 45% as a random sample of the companies listed in ADX, for many sectors to achieve this goal.After researchers collect the data needed to achieve this study, they calculate some of ratios as variables of study, like the annual Return for the companies (R_it), Interest Rate (Int.R_it), Inflation Rate (Inf.R_it) and they used Statistical Package for the Social Science (SPSS) to analyze the data collected.The results of this study were the existence statistically significant Impact for the Interest Rate & Inflation Rate on the Stocks Return (Rit) in the companies listed in Abu Dhabi Securities Exchange (ADX) for the study period. And The Independent variables in this study Inflation Rate (Inf.R_it) and Interest Rate (Int.R_it) can explain 19.6% of changes that happened in the stock return (Rit) in (ADX).And there is a Negative statistically significant Impact for the Interest Rate (Int.R_it) on the Stocks Return (Rit) in the companies listed in (ADX) for the same period, and the Interest Rate (Int.R_it) only, can explain 10.9 % of changes that happened in the stock return (R_it) in (ADX).And there is a Negative statistically significant Impact for the Inflation Rate (Inf.R_it) on the Stocks Return (R_it) in the companies listed in (ADX) for the study period, and the inflation rate (Inf.R_it) only, can explain 5.1% of changes that happened in the stock return (R_it) in Abu Dhabi Securities Exchange (ADX).

JEL classification: G20, G21, G24, G30, G31, E31, E3, G12, G1

Keywords: Abu Dhabi securities Exchange (ADX), Stock Return (R_it), study Inflation Rate (Inf.R_it), Interest Rate (Int.R_it).