The crises have tremendous impact on both economy and stock market in Thailand. During the crises, the inflation rate rose which resulted in higher required rate of return as well as higher stock market volatility. Consequently, it leaded to drop in stock prices to keep the level of price to equity ratio.
In the view of inflation volatility, the increasing inflation volatility stimulatedstock market instability. As a result, it initiates the same consequences as stated earlier.
Fama (1981) proposed proxy hypothesis which illustrates the negative relationship between inflation rate and stock prices.
The negative stock returns – inflation relationship is explained by the positive relationship between stock returns and basic determinants of equity values, such as capital expenditures, average real rate of return capital and productivity of a company (Fama,
1981).
The crises have tremendous impact on both economy and stock market in Thailand. During the crises, the inflation rate rose which resulted in higher required rate of return as well as higher stock market volatility. Consequently, it leaded to drop in stock prices to keep the level of price to equity ratio.
In the view of inflation volatility,การเพิ่มอัตราเงินเฟ้อ ความผันผวนของตลาด stimulatedstock ไร้ เป็นผลให้มันเริ่มผลเดียวกันตามที่ระบุไว้ก่อนหน้านี้ .
Fama ( 1981 ) ได้เสนอสมมติฐานที่พร็อกซี่แสดงความสัมพันธ์ทางบวกกับอัตราเงินเฟ้อ และราคาหุ้น
The negative stock returns – inflation relationship is explained by the positive relationship between stock returns and basic determinants of equity values, such as capital expenditures, average real rate of return capital and productivity of a company (Fama,
1981).
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