A Comparison of Global Financial Market Recovery after the 2008 Global Financial Crisis

Open access

Abstract

The Financial Crisis of 2007-2009 plunged countries into a Great Recession and focused the world’s attention on the global stock markets. The global contagion has a major impact on global stock markets, with the U.S. DJIA falling to 6,547.05 on March 9, 2009 from a high of 14,164.53 on October 9, 2007, with a loss of more than 54%. Other stock markets also had a precipitous drop during the financial crisis. However, some equity markets have recovered while others have not. This paper looks at how global markets compared in their recovery. This paper also investigates the advanced countries’ recovery relative to the emerging and developing countries in the aftermath of the financial crisis and their ability to climb back to the pre-financial crisis levels. Analysis is provided for 31 stock indexes from January 2005 to March 2013. In 2013 the majority of analysed stock markets recovered from the crises regardless of if they belong to the group of developed or emerging markets.

Arner, D.W. (2009). The Global Credit Crisis of 2008: Causes and Consequences. The International Lawyer, 43, 91-136.

Batram, S., and Bodnar, G. (2009). No Place to Hide: The Global Crisis in Equity Markets in 2008/2009. Journal of International Money and Finance, 28, 1246-1292.

Blanchard, O. (2009). Sustaining a Global Recovery. Finance & Development, 46 (3), 8-12.

Bloomberg News. (2011). Crisis may Force Banks to Set up Crisis-handling Procedures. Retrieved from http://www.bloomberg.com/news/articles/2011-02-21/china-may-forcebanks-to-set-up-procedures-for-handling-potential-crisis (12.03.2016).

Bordo, M. (2008). An Historical Perspective on the Crisis of 2007-2008. NBER Working Paper #14569, National Bureau of Economic Research, December.

Boschi, M. (2005). International financial contagion: evidence from the Argentine crisis of 2001-2002. Applied Financial Economics, 3 (15), 153-163.

Chang, H. (2012). An International Comparison of Volatility in Stock Market Returns Prior and Post Global Financial Crisis. International Proceedings of Economics Development and Research, 29, 270-276.

CNNMoney.com (2009). 5 lessons from the crash. September 10. Retrieved from http://money.cnn.com/2009/09/09/news/economy/financial_crisis.moneymag/index.htm (16.02.2016).

Dooley, M., Hutchison, M. (2009). Transmission of the U.S. Subprime Crisis to Emerging Markets: Evidence on the Decoupling-Recoupling Hypothesis. NBER Working Paper 15120, June.

Dungey, M., Fry, R., Gonzalez- Hermosillo, B., Martin, V. (2002). International Contagion from the Russian Crisis and the LTCM near-collapse. IMF Working Paper WP/02/74, April. Retrieved from http://www.imf.org/external/pubs/ft/wp/2002/wp0274.pdf (12.03.2016).

Edwards, S., Susmel, R. (2003). Volatility Dependence and Contagion in Emerging Equity Markets. Journal of Development Economics, 66, 505-532.

Forbes, K.J., Rigobon, R. (2002). No Contagion, only Interdependence: Measuring stock Market Co-movements. Journal of Finance, 57, 2223-2261.

Goldberg, L., Dages, B.G., Kinney, D. (2000). Foreign and Domestic Bank Participation in Emerging Markets: Lessons from Mexico and Argentina. NBER Working Paper No. 7714, May.

Goldstein, M. (1998). The Asian Financial Crisis: Causes, Cures, and Systemic Implication. Peterson Institute for International Economics, Peterson Institute Press.

International Monetary Fund (2010a). Annual Report 2010 Supporting a Balanced Global Recovery. Retrieved from https://www.imf.org/external/pubs/ft/ar/2010/eng/pdf/ar10_eng.pdf (24.06.2016).

International Monetary Fund (2010b). World Economic Outlook Database.

International Monetary Fund (2012). World Economic Outlook Database.

International Monetary Fund (2016). World Economic Outlook Database.

Kenc, T., Dibooglu, S. (2010). The 2007-2009 Financial Crisis, Global Imbalances and Capital Flows: Implications for Reform. Economic Systems, 34, 2-31.

Levene, H. (1960). Robust Tests for Equality of Variances. In: I. Olkin et al. (eds.), Contribution to Probability and Statistics. Essays in Honor of Harold Hotelling (pp. 278-292). Stanford, California: Stanford University Press.

Longin, F., Solnik, B. (1995). Is Correlation in International Equity Returns Constant: 1960-1980. Journal of International Money and Finance, 14, 3-26.

Mann, H.B., Whitney, D.R. (1947). On a Test of Whether one of Two Random Variables is Stochastically Larger than the Other. Annals of Mathematical Statistics, 1 (18), 50-60.

Mohan, R. (2009). Global Financial Crisis: Causes, Impact, Policy Responses and Lessons. Working paper No. 407, Stanford Center for International Development, December.

Nguyen, D.K. (2005). Market Deregulations, Volatility and Spillover Effects: Experience from Emerging Stock Markets. In: S. Motamen-Samadian (ed.), Governance and Risk in Emerging and Global Markets (pp. 89-120). United Kingdom: Plagrave Macmillan.

Phylatis, K., Ravazzzolo, F. (2002). Measuring Financial and Economic Integration with Equity Prices in Emerging Markets. Journal of International Money and Finance, 21, 879-903.

Radelet, S., Sachs, J. (1999). What Have We Learned, So Far, From the Asian Financial Crisis? Retrieved from http://www.cid.harvard.edu/archive/hiid/papers/aea122.pdf.

Ramlall, I. (2009). Assessing the Impact of US Subprime Crisis on SEMDEX: In Quest for a Change in Stock Market Interdependence. International Research Journal of Finance and Economics, 30, 30-44.

Ramlall, I. (2010). Has the US Subprime Crisis Accentuated Volatility Clustering and Leverage Effects in Major International Stock Markets? International Research Journal of Finance and Economics, 39, 157-185.

Rejeb, A.B. (2013). Volatility Spillovers and Contagion: An Empirical Analysis of Structural Changes in Emerging Market Volatility. Economics Bulletin, 1 (33), 56-71.

Sheng, H.C., Tu, A.H. (2000). A Study of Cointegration and Variance Decomposition among National Equity Indices before and during the Period of the Asian Financial Crisis. Journal of Multinational Financial Management, 10 (3), 345-365.

Sojli, E. (2007). Contagion in emerging markets: the Russian crisis. Applied Financial Economics, 17 (3), 197-213.

Stiglitz, J. (1999). Reforming the Global Economic Architecture: Lessons from Recent Crises. The Journal of Finance, 54 (4), 1508-1521.

Wall Street Journal (2013a). G-20 Brings Currency War One Step Closer. Retrieved from http://online.wsj.com/article/SB10001424127887323495104578311681662780890.html (18.02.2016).

Wall Street Journal (2013b). China Fund Warns Japan Against a “Currency War”. Retrieved from http://online.wsj.com/article/SB10001424127887324034804578343913944378132.html (6.03.2016).

Wall Street Journal. (2013c). Chinese Banks feel trains after Long Credit Binge. Retrieved from http://www.wsj.com/articles/SB10001424127887323446404579010781178659564 (12.03.2016).

Wei, L. (2013). China Fund Warns Japan Against a ‘Currency War’. Retrieved from http://www.wsj.com/articles/SB10001424127887324034804578343913944378132 (6.03.2016).

Folia Oeconomica Stetinensia

The Journal of University of Szczecin

Journal Information

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 575 575 70
PDF Downloads 167 167 39