Abstract:
Purpose- The study is undertaken to know the impact of interest rate on the stock performance of
banking industry of Pakistan. Big five banks were selected as sample and the stock performance was
measured with the help of Stock Prices. Data of eight years is collected which covered the time period
from January 2007 to December 2014.
Methodology/saniple- Simple Linear Regression Model is used to analyze the relationship between
Interest Rate and Stock Prices of all sample banks. Sample offive banks was used and data was taken
for 32 quarters (March-2007-Dec-2014).
Findings- The findings show that there is significant negative relationship between interest rate and
stock prices, as interest rate increase, it decreases the stock prices ofbanks.
Practical Implications- Interest Rate and Stock Market Performance are two main elements which
contributes in the economic growth of country so there clear relationship will give a clear idea about
the direction of economic growth ofthe country
