Banking on sunshine: Examining the effects of weather on the Philippine Stock Exchange

• Main Authors: Eclavea, Lorenz Lemuel T., Ng, Lauren Wendell C., Tan, Joanne Catherine, Yang, En Hsin
• Format: text
• Language: English
• Published: Animo Repository 2016
• Subjects: Stock exchanges > Philippines; Weather > Economic aspects > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/9025
• Institution: De La Salle University

This study aims to analyze the relationship of mood-inducing weather variables on investors' behavior, in relation to the Philippine Stock Exchange index level. Prior literature in the past two decades proclaims that the weather-effect exists across different equity markets across the world. This study utilizes daily weather data from the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) testing it against daily closing index level from the Philippines Stock Exchange during the years 2006 to 2015 by employing a time series regression analysis. Proponents find the presence of the weather effect in the local setting, particularly rainfall and humidity, at the same time considering the effects of certain calendar anomalies and market factors. Thus concluding that the weather effect exists in the country, and investors' decision-making processes are subconsciously affected by psychological biases and mood changes caused by the immediate environment. To be best of the proponent's knowledge this research is the first to examine the prevalence of the weather effect in the Philippine setting.