The impact of GNP, economic growth rate and interest rate on financial market performance: A comparative study between the Saudi and the Egyptian Financial market

The aim of this paper is to reveal the impact of the economic variables (gross national product, growth rate and interest rate) on the performance of the Saudi and Egyptian financial markets as indicated by the trading market index. The problem of this study lies in analyzing the effect of quantitative economic variables on the performance of the financial markets in the Kingdom of Saudi Arabia compared to Egypt. The hypothesis used the descriptive and the statistical methodology. The research reached that the economic variables explain 94% of the changes that occur in the Saudi financial market, and 57% of the changes that occur in the Egyptian financial market. The interest rate had a negative impact on the Saudi and the Egyptian financial markets, and the growth rate and gross national product have a positive impact on the Saudi and the Egyptian financial markets. The most important recommendations are linking the tools of economic policies to the analysis of financial markets, providing liquidity for the financial system, and reducing compulsory reserve requirements in banks in order to achieve stability in financial markets.