Thesis defence in the University of Oulu

Doctoral Candidate

M.Sc. Asif M. Ruman

Faculty and research unit

University of Oulu Graduate School, Oulu Business School, Department of accounting, economics and finance
029 4480000

Field of study

Financial economics

Date and time of the thesis defence

10.12.2020 12:00

Place of the thesis defence

TA105, Linnanmaa, Zoom link:

Topic of the dissertation

Dividends, Fed’s total assets, outside money and stock market performance.


Professor Mika Vaihekoski, University of Turku


Professor Petri Sahlström, University of Oulu

Dividends, Fed’s total assets, outside money and stock market performance.

The literature shows that stock market performance can be predicted using financial ratios such as dividend yield and macroeconomic variables such as money supply and monetary policy tools. After the 2008 financial crisis, policymakers relied upon assets purchase programs because of near-zero interest rates, known as quantitative easing. The resemblance between a central bank’s balance sheet size and outside money supply resurrects an age-old question: how does money supply affect stock market performance?

This thesis comprises three essays and uses the asset-pricing framework to analyze stock market performance. The first essay highlights the role of high autocorrelation of dividend yield in predicting stock market return using dividend yield and payout yield.

This essay shows that dividend yield does not predict price-series return that is the main component of market return. Essays II and III analyze stock market performance using two different proxies for the financial demand for outside money supply. Specifically, essay II investigates the Fed’s balance sheet size in the wake of unconventional monetary policy. Similarly, essay III discusses the similarities between the Fed’s balance sheet size and the monetary base in addition to discussing the characteristics of different types of money supply.

Collectively, essays II and III show that outside money supply (measured by the Fed’s balance sheet size and the monetary base) compared to asset market wealth predicts stock market performance. These findings suggest that policymakers should strive to avoid a severe imbalance between outside money supply and asset market wealth.


Last updated: 7.12.2020