Does credit for equity investments feedback on stock market volatility? Evidence from an emerging stock market

Ibrahim Onour

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the causal relationships between volatility in Saudi stock market and banks credit for equity investments. Our finding indicate there is a bi-directional feedback effects between the stock price volatility and banks credit loans. In other words, volatility in private credit for equity investments influence volatility in stock price and vice versa. A policy implication of such result is that regulating private credit loans in banking sector could reduce the upnormal swings in Saudi Stock prices.

Keywords: Saudi stock market; Volatility; speculation; banks' credit (search for similar items in EconPapers)
JEL-codes: C10 C50 (search for similar items in EconPapers)
Date: 2011-01-02
New Economics Papers: this item is included in nep-ara and nep-ban
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:28001

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