IMPACT OF INTEREST RATE ON THE STOCK MARKET IN NEPAL

Abstract

This study examines the impact of interest rates on Nepal's stock market from April 2013 to March 2023. Using descriptive and causal-comparative designs, secondary data from Nepal Rastra Bank, NEPSE, and commercial banks were analyzed with correlation, t-tests, ANOVA, and regression methods. Findings reveal significant negative impacts of the Bank Rate, Weighted Average Lending Rate, and Spread Rate on the NEPSE Index, indicating higher borrowing costs reduce stock performance. Conversely, the Treasury Bills Rate shows a significant positive effect, attracting investment in government securities and benefiting the stock market. The Cash Reserve Ratio, Base Rate, and Interbank Rate have no significant impact. Effective management of borrowing costs and competitive Treasury Bills Rates are crucial for enhancing stock market performance.