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Stocks and shocks

Author

Listed:
  • Bert Scholtens

    (University of Groningen, Department of Finance, Groningen (The Netherlands))

  • Marélie Steensma

    (University of Groningen, Department of Finance, Groningen (The Netherlands))

Abstract

How do stock markets respond to extreme events? This paper analyzes the reaction ofstock markets in four industrialized economies (Italy, the Netherlands, Sweden, the US) to ten major international crises. We employ an event study to investigate whether the stock exchanges react differently with respect to extreme events such as the Chernobyl nuclear power plant meltdown, the Gulf War, the peso crisis, the Kosovo War or the 11/9 attack on the US. There is no substantial evidence that markets react differently to extreme events than to more ordinary news. We have significant evidence that there is no standard reaction of stock markets to extreme events.

Suggested Citation

  • Bert Scholtens & Marélie Steensma, 2002. "Stocks and shocks," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 55(223), pages 347-361.
    • Handle: RePEc:psl:bnlqrr:2002:41
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9914/9796
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    References listed on IDEAS

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    Cited by:

    1. Burdekin, Richard C.K. & Siklos, Pierre L., 2022. "Armageddon and the stock market: US, Canadian and Mexican market responses to the 1962 Cuban Missile Crisis," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 112-127.

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    More about this item

    Keywords

    Stock Market; Stocks;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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