The Philippine Stock Exchange Index (PSEi) and its Selected Macroeconomic Indicators: Catalyst for Sustainable Economic Growth

Maybelle Gallardo; Edilberto Viray, Jr.

doi:10.58870/berj.v10i1.81

Authors

Maybelle Gallardo San Beda University, Manila, Philippines
Edilberto Viray, Jr. San Beda University, Manila, Philippines

Keywords:

Philippines, Stocks, Exchange, inflation, interest, gross domestic product

Abstract

The Bangko Sentral ng Pilipinas (BSP) goal in financial inclusion was not only to provide universal access to financial services but to use these financial services to improve the financial health of each Filipino. Based on its study, only a few Filipinos can be considered financially literate. Financial literacy results in a person's good financial well-being. Investment in the stock exchange is part of the financial ecosystem and considered one of its aggressive investments. There was scant literature specifically on the relationship between PSEi and its selected macro indicators, which measured the performance of the Philippine stock market. Hence, this study significantly addresses this gap. The study's main goal was to probe the impact of the macroeconomic indicators, namely gross domestic product (GDP), inflation rate, exchange rate, and interest rates, on the performance of the stock market. Employing secondary data, these indicators were processed and measured using the Granger causality analysis. Results showed that the trend on each indicator reflected a significant relationship to PSEi. As the country promotes more investment, this study provides valuable insights into the potential cause-and-effect benefits of the changes in the macro-indicators. Further, the PSE index served as a significant means to measure the performance of the stock market. It provided guidance for investors in making sound decisions. A stable and growing PSEi enhances the market trust, thereby optimizing productivity. A robust PSEi attracts local and international investments, leading to economic growth. Hence, BSP and DOF may adopt the use of PSEi using the selected macro indicators as part of their financial inclusion program on financial literacy and investment.

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