Rates of Return on Stocks, T-Bills, and Deposits in the Philippines, 1987-1992

Abstract

The study provides estimates of after-tax rates of return of treasury bills, common stocks, and bank deposits over the 68-month period from November 1986 to June 1992.  This period is noteworthy in the history of Philippine financial markets:  it was a period of deregulated interest rates, and was characterized by episodes of stability and instability.  Financial returns generally displayed the high risk-high return pattern expected of competitive financial markets.  Common stocks provided the highest after-tax rates of return and risk in Philippine financial markets, followed by treasury bills, peso time deposits, dollar time deposits, and savings deposits.  In general, investors enjoyed positive real rates of return.