Volatility at Karachi Stock Exchange
Aslam Farid and
Additional contact information
Aslam Farid: Textile University of Pakistan, Karachi.
Javed Ashraf: Textile University of Pakistan, Karachi.
The Pakistan Development Review, 1995, vol. 34, issue 4, 651-657
Frequent “crashes” of the stock market reported during the year 1994 suggest that the Karachi bourse is rapidly converting into a volatile market. This cannot be viewed as a positive sign for this developing market of South Asia. Though heavy fluctuations in stock prices are not an unusual phenomena and it has been observed at almost all big and small exchanges of the world. Focusing on the reasons for such fluctuations is instructive and likely to have important policy implications. Proponents of the efficient market hypothesis argue that changes in stock prices are mainly dependent on the arrival of information regarding the expected returns from the stock. However, Fama (1965), French (1980), and French and Rolls (1986) observed that volatility is to some extent caused by trading itself. Portfolio insurance schemes also have the potential to increase volatility. Brady Commission’s Report provides useful insights into the effect of portfolio insurance schemes. It is interesting to note that many analysts consider the so-called “crashes” of Karachi stock market as a deliberate move to bring down prices. An attempt is made in this study to examine the effect of trading on the volatility of stock prices at Karachi Stock Exchange (KSE). Findings of the study will help understand the mechanism of the rise and fall of stock prices at the Karachi bourse.
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pid:journl:v:34:y:1995:i:4:p:651-657
Access Statistics for this article
More articles in The Pakistan Development Review from Pakistan Institute of Development Economics Contact information at EDIRC.
Series data maintained by Khurram Iqbal ().