INFLUENCE OF MONETARY POLICY TOWARD STOCK MARKET VOLATILITY IN SAUDI ARABIA

Abstract

The study aimed to evaluate effect of good monetary policies on stability and sustainability of economy. The quantitative approach of descriptive statistical analysis used in SPSS analysis tool. The quantitative approach was conducted to determine monetary effect on the stock market with main model and dependent variable as volatility in stock market. There were main test which included regression and correlation test explained effect changes on exchange rates and interest rate and GDP. The methodological model predicts framework of regression analysis with proposed equation and model. The primary data was based on descriptive statistical analysis aspect which describes SPSS analysis needed for following case. Meanwhile, secondary data included literature review such as SAMA (Saudi Arabia Monetary Agency), IMF (International Monetary Fund) database to obtain the GDP (Gross Domestic Product). Besides, oil prices data was obtained from FRED database (The Federal Reserved). The data duration was 17 years quarterly between year 1997 and 2014. , the multivariate regression indicated exchange rates included GDP was impacted stock market volatility but interest rates had not impacted stock market. Besides, two of most common monetary policies effect was exchange rate change and GDP. Nowadays, coordinated market was important for national banks and other budgetary powers to offer data and impart on emergency anticipation measures. In such manner, BIS had been instrumental in provided national banks foundation research on different focal keeping money and market-related issues foe discourse in their standard gatherings. In this study, the result had validated the fact that exchange rate changes and GDP effects had fluctuate effect on the stocks.