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Comparative Analysis of U.S. and China’s Monetary Policy Effects on the Stability of the Hong Kong Financial Market

In: Proceedings of the 2025 3rd International Academic Conference on Management Innovation and Economic Development (MIED 2025)

Author

Listed:
  • Yijie Liu

    (Lingnan University, Faculty of Business)

Abstract

This study investigates the integrated effects of U.S. and Chinese equity markets, monetary policies, and exchange rate dynamics on Hong Kong’s financial stability using a tripartite VAR model (2015–2025) and Granger causality test. Findings indicate U.S. equity volatility and USD-CNY fluctuations strongly Granger-cause Hang Seng Index instability, while China’s equity market and monetary policy display secondary yet notable causal effects. U.S. monetary policy generates spillover effects via equity and currency channels, indirectly pressuring China’s yields and amplifying systemic risks. Under the tone of globalization, Hong Kong’s dual vulnerability—as a dollar liquidity conduit and mainland financial gateway—necessitates macroprudential buffers against cross-border volatility and enhanced integration with the mainland market to balance U.S.-China monetary divergence.

Suggested Citation

  • Yijie Liu, 2025. "Comparative Analysis of U.S. and China’s Monetary Policy Effects on the Stability of the Hong Kong Financial Market," Advances in Economics, Business and Management Research, in: Barbara Siuta-Tokarska & Adriana Grigorescu & Md. Mamun Habib & Yifeng Zhu (ed.), Proceedings of the 2025 3rd International Academic Conference on Management Innovation and Economic Development (MIED 2025), pages 887-895, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-835-6_94
    DOI: 10.2991/978-94-6463-835-6_94
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