Effect of Selected Macroeconomic Variables to Treasury Bill Rate

Abstract

This study aims to evaluate the effects of price-earnings ratio, exchange rate, and inflation rate on the Treasury Bill rate in the Philippines. It utilized quarterly time series of secondary data from 2010 to 2017. Battery of econometric tests was employed to ensure the reliability of data. Results showed that price-earnings ratio and exchange rate exert statistically significant link with the Treasury Bill rate while inflation rate remains statistically insignificant. Moreover, the connection between foreign exchange market and money market are deemed direct and positive while equity market and inflation variable are noted to have an inverse relationship with Treasury Bill rate. Based on the foregoing findings, the researchers recommend the investing public to reduce their risks by making sound investment decisions, to promote information transparency, and to foster financial education across the industry.