The International National Stock Markets of the Nordic Countries – The Effects of Monetary Policy
No Thumbnail Available
URL
Journal Title
Journal ISSN
Volume Title
School of Business |
Bachelor's thesis
Electronic archive copy is available locally at the Harald Herlin Learning Centre. The staff of Aalto University has access to the electronic bachelor's theses by logging into Aaltodoc with their personal Aalto user ID. Read more about the availability of the bachelor's theses.
Authors
Date
2022
Department
Major/Subject
Mcode
Degree programme
Rahoitus
Language
fi
Pages
34
Series
Abstract
This paper measures the effects of key target rates surprises on the returns in the stock exchanges of the Nordic countries – both the initial and the delayed impact. The key target rate decisions of the European Central Bank and the Federal Reserve are considered. The inclusion of two different central banks allows for the distinction and comparison between the monetary union’s internal effects and the spillover effects from another banking system. The results uniformly conform to the nonuniformity the related literature suggests: by and large, unanticipated target rate hikes are met with falls in stock indices, but the specifics of the magnitude and manner vary greatly. Overall, on the first two days following an unanticipated target rate hike, all Nordic stock exchanges reacted negatively, ranging from – 2 % to – 5 % daily loss in each index. However, the effects are far from instantaneous, as in most cases the negative statistically significant coefficient was only observed on the second day relative to the announcement. There also seems to exist a significant asymmetry between the reactions to unanticipated positive and negative rate changes.Description
Thesis advisor
Joenväärä , JuhaKeywords
target interest rate, monetary policy, spillover, central bank, Nordic markets