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Badla Financing, Stock Returns and Volatility: The Case Study of Karachi Stock Exchange

Rashid, Abdul and Ahmad, Shabbir (2008): Badla Financing, Stock Returns and Volatility: The Case Study of Karachi Stock Exchange. Published in: The Empirical Economics Letters , Vol. 7, No. 7 (17. June 2008): pp. 733-740.

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Abstract

Using badla financing as a measure of leverage we examine both temporal and contemporaneous links among badla financing, stock returns and market volatility. We find that the market volatility is significantly and positively related to the change in badla financing and to past market returns. We also observe a significantly positive temporal causation between prior market returns and both badla financing as well as stock price volatility.

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