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Asian Journal of Research in Business Economics and Management
Year : 2018, Volume : 8, Issue : 7
First page : ( 4) Last page : ( 15)
Online ISSN : 2249-7307.
Article DOI : 10.5958/2249-7307.2018.00061.0

The effect of fed rate changes on the performance of stock markets-The case of Asia

Dr. Manu K S*, Gangavaram Anirudh**

*Assistant Professor, Department of Management Studies, Christ University, Bengaluru, India. manu.ks@christuniversity.in

**Student, Department of Management Studies, Christ University, Bengaluru, India

Online published on 16 August, 2018.

Abstract

Federal reserve rates, the rate determinant of what the banks charge for overnight lending of reserves to other banks is decided by a group known as the FOMC [Federal Open Market Committee] based on their analysis of the monetary and financial conditions of US and other global markets. The study has been undertaken to analyse the effect of Fed rate changes on the performance of major Asian stock indices (NIFTY 50, NIKKEI 225, HANGSENG, TAIWAN TSEC 50 and SHANGHAI SE). The study analysed by considering four different event periods (5, 10, 20 and 40). The study used paired sample t test to analyse the effect of fed rate changes. Overall the study found no significant difference in performance of the selected Asian stock indices before and after the announcement of Fed rate changes. It indicates that the fundamentals of the emerging stock markets are stronghold, thus no reflection of hike in fed rate on Asian stock markets.

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