Effects of inflation on the activities of the Uganda securities exchange.

Abstract

The study’s objective is to determine the effect of Inflation on the Activities of the Uganda Securities Exchange. Using secondary time-series yearly data covering the period from 2001 to 2021, this study analyzes the relationship between Inflation and the Activities of the Uganda Securities Exchange. In addition, the study examines the short-run and long-run effect of inflation on the Activities of the Uganda Securities Exchange in the period of analysis. This study equally investigates the relationship between inflation and the Activities of the Uganda Securities Exchange. To achieve the required objectives, correlation and regression analysis were used. Specifically, the ARDL model was used to examine both the short-run and long-run effects of inflation and the activities of the Uganda Securities Exchange taking care of the lags of the independent variables. In addition, descriptive analysis was used to analyze the characteristics of the different variables in the research study. The study finds that inflation has a significant influence on the Activities of the Uganda Securities Exchange. The study also finds that there is both short-run and long-run effect of inflation on the Activities of The Uganda Securities Exchange. In the short-run, an increase in the inflation rate led to a decrease in the Activities of the Uganda Securities Exchange. However, in the long-run an increase in the inflation rate led to an increase in the Activities of the Uganda Securities Exchange. Lastly, the study recommends that the central bank should maintain a flexible monetary policy that can quickly respond to inflation spikes which can help reduce uncertainty in the market. This can help to boost investor confidence at the Uganda Securities Exchange.