IDEAS home Printed from https://ideas.repec.org/p/csg/ajrcau/393.html
   My bibliography  Save this paper

Stock Prices Of Domestic Banking Sector And External Shocks In East Asia

Author

Listed:
  • Masahiro Inoguchi

Abstract

This paper examines the impact of price fluctuations in foreign stock markets on the stock prices of domestic banks’ stocks to explore if and how external shocks have affected the banking system in Korea, Malaysia, Singapore, and Thailand during the 2000s. Some researchers insist that domestic banks in East Asia were less affected by the 2007–2009 global financial crisis. However, few previous articles have investigated how the banking sector in East Asia has been affected by external shocks. Employing a multinomial logit model, this study estimates how changes in the US and Japanese stock market indices affected the banking sectors in Korea, Malaysia, Singapore, and Thailand before the 1997 crisis and before and during the 2007–2009 crises. This study’s regression employs the number of banks in a given country that experienced a large shock on the same day (“coexceedances”) as shocks to the domestic banking sector. The regression result suggests that fluctuations in foreign stock market indices had a larger impact on prices of East Asian banking stocks during the 2000s than during the 1990s before the Asian financial crisis. Although the shock brought by the deteriorating foreign stock markets was significant before the 2007–2009 global financial crisis, both increases and declines in the foreign stock prices affected the banking sector during the crisis. Increasing foreign capital flows and foreign assets and liabilities may have greatly influenced the domestic banking system of East Asia in the 2000s.

Suggested Citation

  • Masahiro Inoguchi, 2011. "Stock Prices Of Domestic Banking Sector And External Shocks In East Asia," Asia Pacific Economic Papers 393, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:csg:ajrcau:393
    as

    Download full text from publisher

    File URL: https://crawford.anu.edu.au/pdf/pep/apep-393.pdf
    Download Restriction: no

    More about this item

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:csg:ajrcau:393. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Akira Kinefuchi). General contact details of provider: http://edirc.repec.org/data/ajrccau.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.