The moderating Impact of financial development in the nexus between Macroeconomics, Microeconomics Variables and Stock Market Returns: Evidence from Egyptian and German Markets

The research examines how domestic credit to the private sector (DCPS) affects stock market returns through its interaction with macroeconomic and microeconomic factors during 2015–2024 in Egypt and Germany. The research employs panel regression and GMM estimations to reveal important structural variations which exist between these two markets. The stock market returns in Egypt show positive relationships with macroeconomic indicators because the market experiences high price fluctuations which result in elevated risk premiums. The German financial market shows negative or inconsistent responses to these variables because its financial stability remains constant. The analysis shows that microeconomic factors do not affect Egyptian markets, but German markets show strong evidence of their impact on firm fundamentals. The DCPS system in Egypt demonstrates a weak ability to control market dynamics because it only affects the relationship between inflation and investment returns. The financial system in this country remains underdeveloped. The macroeconomic and microeconomic relationships in Germany show substantial and important moderating effects according to the analysis. The research results demonstrate that financial development creates market stability which controls how economic indicators affect stock market price movements.