Analysis of the Impact of Macroeconomic Factors on the Development of Financial Products: Application of the PESTEL Model in Identifying Opportunities and Threats

Authors

https://doi.org/10.22105/tqfb.v1i2.40

Abstract

Macroeconomic factors significantly influence a country's economy and financial markets, thereby playing a pivotal role in the development of financial products. The PESTEL framework serves as a comprehensive analytical tool to examine the impact of political, economic, social, technological, environmental, and legal factors in identifying opportunities and threats for financial product development. This study utilizes the PESTEL model to analyze the impact of macroeconomic factors on the evolution of financial products and explores the associated opportunities and challenges. The research investigates macroeconomic factors such as interest rates, inflation, economic growth, political stability, societal changes, technological advancements, growing environmental consciousness, and regulatory frameworks. Data were collected from reliable secondary sources and analyzed using qualitative content analysis. Findings indicate that political stability and government support for financial innovation can foster the development of new products. Conversely, political instability and unexpected regulatory changes pose significant threats to financial firms. Economic conditions like interest rates and economic growth exert a substantial influence on market demand and access to capital. The results suggest that lower interest rates and economic growth create favorable opportunities for financial product development. Furthermore, evolving consumer needs and preferences, coupled with technological advancements, particularly in fintech, are transforming financial processes and customer experiences, enhancing efficiency, and improving customer satisfaction. Additionally, the increasing focus on environmental issues has driven demand for green and sustainable financial products. This research recommends that financial managers and policymakers analyze and understand these factors to capitalize on emerging opportunities and mitigate risks by adapting to environmental and technological changes. Future research can delve deeper into the intricate relationships between these factors through a more international perspective.

Keywords:

Political factors, Economic factors, Social factors, Technological factors, Environmental factors, Legal factors

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Published

2024-11-14

Issue

Vol. 1 No. 2 (2024): Transactions on Quantitative Finance and Beyond

Section

Articles

How to Cite

Makvandi, R. (2024). Analysis of the Impact of Macroeconomic Factors on the Development of Financial Products: Application of the PESTEL Model in Identifying Opportunities and Threats. Transactions on Quantitative Finance and Beyond, 1(2), 233–246. https://doi.org/10.22105/tqfb.v1i2.40
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