Market reaction as an impact of announcement increase fed interest rate in Asian and European area

The purpose of this study is to determine whether there is a difference in the average abnormal return around the date of the announcement of the Fed's interest rate hike in Asia and the European region. The sample of this study was 18 emerging market countries' index indices in Asia and Europe with sample collection techniques using purposive sampling. This study uses One Way Anova analysis techniques and One Sample T-test. The results found that there was no difference in the average abnormal return before and after the announcement of the Fed's interest rate increase. This condition shows that markets in the two regions do not react significantly because markets in Asia and the European region are in an efficient condition in the form of half strong, where the market absorbs information quickly and is reflected in stock prices so there is no difference in the average abnormal return in both regions. The absence of a difference in the average abnormal return is also caused by the uncertainty of the global economy making investors more careful in making investment decisions

Essays On The Impacts Of Quantitative Easing On Financial Markets

Due to the severity of the financial crisis of 2008, the Federal Reserve had attempted a variety of unconventional monetary policy to support the U.S. financial markets at the verge of collapse. The most well-known of the Fed\u27s unconventional monetary policy is quantitative easing, in which it purchased a large amount of government securities from the markets in order to lower longer term interest rates and mortgage rates. The several rounds of quantitative easing had different impacts, intended as well as unintended, on U.S. financial markets and foreign markets. The purpose of this paper is to fully explore the effects, especially the unintended ones, the different rounds of quantitative easing have on financial markets. The first chapter is a comprehensive study of the unconventional monetary policy taken by the Federal Reserve since the financial crisis, specifically on the purchases of different assets by the Fed to change medium and long-term rates. Included in this chapter are the three rounds of quantitative easing, and the two rounds of Operation Twist. A study as such is needed in order to examine if the Fed\u27s purchases of these various long-term assets had any effect on the financial markets in the longer term perspective since the first announcement of such purchase in November 2008. While there exists a variety of literature on the effects of quantitative easing on Treasuries and mortgage backed securities, there is no single study comprising of all the large scale asset purchases by the Fed, covering their effects on all major financial assets. This first chapter is an attempt to fill this void in current literature on quantitative easing. The second chapter utilizes an event-study approach to analyze the impact of announcements regarding the third round of quantitative easing on emerging market economies. Using a daily panel data of fifteen emerging economies, the period examined is from August 1, 2012 to May 30, 2014, which is one month before QE3 announcement one month after the fourth announcement of tapering by the Fed. Results show that markets have a larger response to tapering news than easing news, particularly from official Fed press releases. Additionally, these emerging market economies also react to conventional monetary policy of federal funds rate

Essays in Applied Insurance Economics

The papers included in this thesis deal with a few aspects of insurance economics that have seldom been dealt with in the applied literature. In the first paper I apply for the first time the tools of the economics of crime to study the determinants of frauds, using data on Italian provinces. The contributions to the literature are manifold: -The price of insuring has a positive correlation with the propensity to defraud -Social norms constraint fraudulent behavior, but their strength is curtailed in economic downturns -I apply a simple extension of the Random Coefficient model, which allows for the presence of time invariant covariates and asymmetries in the impact of the regressors. The second paper assesses how the evolution of macro prudential regulation of insurance companies has been reflected in their equity price. I employ a standard event study methodology, deriving the definition of the “control” and “treatment” groups from what is implied by the regulatory framework. The main results are: -Markets care about the evolution of the legislation. Their perception has shifted from a first positive assessment of a possible implicit “too big to fail” subsidy to a more negative one related to its cost in terms of stricter capital requirement -The size of this phenomenon is positively related to leverage, size and on the geographical location of the insurance companies The third paper introduces a novel methodology to forecast non-life insurance premiums and profitability as function of macroeconomic variables, using the simultaneous equation framework traditionally employed macroeconometric models and a simple theoretical model of insurance pricing to derive a long term relationship between premiums, claims expenses and short term rates. The model is shown to provide a better forecast of premiums and profitability compared with the single equation specifications commonly used in applied analysis

Essays on Chinese Financial Market

My dissertations aim at understanding the different aspects of the Chinese financial markets. It includes three chapters. The first chapter studies how firm level political connections affect a firm\u27s decision of going to court and the trial outcomes, using hand-collected data on Chinese listed firms. We found that connected firms have a win rate that is 8.6% higher than unconnected firms have. The higher win rate is most significant in cases with straightforward facts, in provinces where the local legal institutions are weak, and in cases tried in politically-connected firms\u27 home provinces. The empirical evidence is consistent with the hypothesis that the difference in the win rates is caused by judicial bias. We show that trial outcomes have real impacts on firms\u27 stock prices. In the second chapter, I examine the effectiveness and cost of monetary sterilization in China. The study adapts a 2SLS method to estimate the extent of China\u27s sterilization. It also compares the sterilization cost with the central bank\u27s income from investing foreign exchange reserves. I conclude that the sterilization has been highly effective to date. Moreover, so far the sterilization cost of the central bank can be fully covered by the income from foreign reserve investment. The third chapter provides a comprehensive review of China\u27s financial system, and explore directions of future development. First, the financial system has been dominated by a large banking sector. Second, the role of the stock market in allocating resources in the economy has been limited and ineffective. Third, the most successful part of the financial system is a non-standard sector that consists of alternative financing channels, governance mechanisms, and institutions. Finally, among the policies that will help to sustain stable economic growth in China are those that reduce the likelihood of damaging financial crises, including a banking sector crisis, a real estate or stock market crash, and a twin crisis in the currency market and banking sector

Perspectives on the Global Financial Crisis From Emerging Managers and Public Policy Makers [Full Version]

This manuscript attempts to capture the perspectives of emerging managers and public policy makers as evinced in the perspectives of graduate students and others who were enrolled in my newly developed course on the global financial crisis—first offered in the 2010 Harvard Summer Economics Program—at a time when students were engaged in the midst and aftermath of the most severe U.S. and worldwide recession since the Great Depression of the early 1930s. The many perspectives gathered on the causes, consequences, remedies, and perhaps more importantly, a glimpse at student thoughts, concerns, and worries at the time—have been collected from the final paper that I assigned in the global crisis course over three cohorts of students including, (1) the Harvard Summer Economics Program of 2010 (Cohort 1), (2) A “Special Topics” course at the University of Massachusetts Boston during Spring semester 2012 (Cohort 2), and (3) the same course offered in the Harvard Summer Economics Program during the summer of 2012. While we have all heard the many opinions and perspectives on the global economic and financial crisis from academia, government, industry among others, we have yet to hear from emerging managers and public policy makers, as captured in this manuscript by the perceptions, beliefs, and positions of graduate students and others of similar standing who will likely hold the reins to managing the global economy and political and societal developments in the years to come. With this in mind, this manuscript attempts to fill the missing void of opinions and perspectives of the next generation of managers and public policy makers—as their opinions and views will likely influence the lives of all for years to come

The first global financial crisis of the 21st century: Part II, June-December, 2008

This book is a selection of VoxEU.org columns that deal with the ongoing global financial crisis. VoxEU.org is a portal for research-based policy analysis and commentary written by leading economists. It was launched in June 2007 with the aim of enriching the economic policy debate by making it easier for serious researchers to contribute and to make their contributions more accessible to the public

Bowdoin Orient v.135, no.1-25 (2005-2006)

https://digitalcommons.bowdoin.edu/bowdoinorient-2000s/1006/thumbnail.jp

Bowdoin Orient v.125, no.1-25 (1994-1995)

https://digitalcommons.bowdoin.edu/bowdoinorient-1990s/1006/thumbnail.jp