The relationship between macroeconomic variables, economic crisis, and stock prices: A review of the literature

This paper provides a comprehensive inspection of the literature due to the significant importance of the subject since most countries around the world currently face a crisis in their economies. This paper has divided the findings of existing research into theoretical and empirical literature and analyzed them to come to conclusions and suggestions. Arbitrage pricing theory and the efficient market hypothesis are the main theories used by most researchers, and the selection of macroeconomic variables is based on the availability and reliability of data sources and their greater importance to the economy in each country. There is a lack of uniformity in the empirical literature on examining the connection between macroeconomic variables and stock prices. There exists a significant research gap particularly concerning the interplay between diverse sector indices and various macroeconomic variables. Moreover, the role of behavioral finance in the relationship between macroeconomic variables and stock prices also should be investigated in future research.