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Linkages between exchange rates and stock prices: Evidence from chinese financial markets

  • Fei Qi*
  • , Boping Tian
  • *Corresponding author for this work
  • Harbin Institute of Technology

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

Abstract

This paper employs panel unit root, co-integration and Granger causality tests to investigate the causality relationships between USD/RMB exchange rate and SSE Composite Index, by using daily data over the period of January 5, 2004 to February 27, 2009. The results indicate that exchange rates lead stock prices after the exchange rate reform, and stock prices lead exchange rates after the explosion of U.S. subprime crisis with a time delay. Furthermore, via impulse response functions and variance decomposition, it is found that U.S. stock prices play an important role in the linkages between the two markets in China.

Original languageEnglish
Title of host publicationProceedings of the IASTED International Conference on Modelling, Simulation, and Identification, MSI 2009
StatePublished - 2009
EventIASTED International Conference on Modelling, Simulation, and Identification, MSI 2009 - Beijing, China
Duration: 12 Oct 200914 Oct 2009

Publication series

NameProceedings of the IASTED International Conference on Modelling, Simulation, and Identification, MSI 2009

Conference

ConferenceIASTED International Conference on Modelling, Simulation, and Identification, MSI 2009
Country/TerritoryChina
CityBeijing
Period12/10/0914/10/09

Keywords

  • Co-integration
  • Exchange rate
  • Granger causality
  • Stock price

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