IDEAS home Printed from https://ideas.repec.org/p/fip/fednls/87229.html
   My bibliography  Save this paper

Did Investor Sentiment Affect Credit Risk around the 2016 Election?

Author

Abstract

Immediately following the presidential election of 2016, both consumer and investor sentiments were buoyant and financial markets boomed. That these sentiments affect financial asset prices is not so surprising, given past stock market evidence and episodes such as the dot-com bubble. Perhaps more surprising, the risk of corporate default—which is driven mainly by firms’ financial health but also by bond liquidity—also fell following the election, as indicated by lower yield spreads. In this post, I show that, although expectations of better corporate and macroeconomic conditions were the primary drivers of lower credit risk, improved investor sentiment also contributed.

Suggested Citation

  • Asani Sarkar, 2017. "Did Investor Sentiment Affect Credit Risk around the 2016 Election?," Liberty Street Economics 20171129, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87229
    as

    Download full text from publisher

    File URL: https://libertystreeteconomics.newyorkfed.org/2017/11/did-investor-sentiment-affect-credit-risk-around-the-2016-election.html
    File Function: Full text
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    credit risks; presidential elections; Investor sentiment;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednls:87229. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.