Interplay of Forces: Macro-Economic Drivers and the Robustness of Stock Returns in the Face of Political and Economic Shocks
Keywords:
Political Shocks, Economic Shocks, Stock Returns, Macroeconomic Indicators, Interaction Effect, Moderating ShockAbstract
This study investigates the dynamics of political and economic shocks on the Indonesian stock market, analyzing data spanning from 2010 to 2023. The research reveals that political shocks exert a statistically significant positive impact on stock returns, indicating that, over time, investors perceive political upheaval as an opportunity for increased stock prices. Macroeconomic indicators, including foreign exchange rates, interest rates, inflation, and economic growth, act as crucial moderators, shaping the nuanced relationship between shocks and stock market outcomes. The analysis suggests variations in moderating effects across investor groups, necessitating further exploration. Comparative insights from related studies, such as the resilience observed in Islamic stock indices during crises, contribute to a comprehensive understanding. This research provides valuable insights for policymakers and investors navigating the complexities of the Indonesian stock market.
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