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Impact of interest rate adjustments on the volatility of overnight return in China's stock market

  • Beihang University
  • Ltd.

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

In the paper, GARCH models are used to analyze the impact of interest rate adjustment on the volatility of overnight return of Shanghai Composite Index in China's stock market. In particular, we use GARCH model based t distribution, TGARCH, EGARCH and GARCH-M models based on normal distribution to analyze the impact of the interest rate adjustment from Sept. 16, 2008 on volatility of overnight return of the Shanghai Composite Index in China's stock market based on three months before and six months after that day. Using all these models, we reached the conclusions that the reduction of interest rates increases the volatility of overnight return of the Shanghai Composite Index. As the overnight return reflects the impact of the government policy to the volatility of stock market, the conclusion may provide some suggestions to policy making in China.

Original languageEnglish
Title of host publication5th International Institute of Statistics and Management Engineering Symposium 2012
Subtitle of host publicationData-Driven Management Science under Developing, IISMES 2012
PublisherAussino Academic Publishing House (AAPH)
Pages267-271
Number of pages5
ISBN (Print)9781629939209
StatePublished - 2012
Event5th International Institute of Statistics and Management Engineering Symposium 2012: Data-Driven Management Science under Developing, IISMES 2012 - Dalian City, China
Duration: 20 Jul 201225 Jul 2012

Publication series

Name5th International Institute of Statistics and Management Engineering Symposium 2012: Data-Driven Management Science under Developing, IISMES 2012

Conference

Conference5th International Institute of Statistics and Management Engineering Symposium 2012: Data-Driven Management Science under Developing, IISMES 2012
Country/TerritoryChina
CityDalian City
Period20/07/1225/07/12

Keywords

  • GARCH models
  • Interest rate adjustment
  • Overnight return
  • Volatility

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