It is the cache of ${baseHref}. It is a snapshot of the page. The current page could have changed in the meantime.
Tip: To quickly find your search term on this page, press Ctrl+F or ⌘-F (Mac) and use the find bar.

Creditor Nations’ Equity Indexes and the U.S. Debt Downgrade | Nippani | International Journal of Economics and Finance

Creditor Nations’ Equity Indexes and the U.S. Debt Downgrade

Srinivas Nippani, Kenneth Washer

Abstract


On Friday, August 5, 2011 Standard and Poor’s rating agency downgraded long-term U.S. Treasury debt from AAA to AA+ for the first time in history. In this study, the impact of this downgrade on world stock markets is examined. We analyze the immediate effect of this downgrade on leading stock indices of 31 nations owning U.S. Treasury debt. We find that the downgrade had a marked effect on the first trading day following the announcement. It truly was a macroeconomic event. We further examine whether return differentials were partially explained by the level of U.S. debt that each country possessed (both on an absolute and relative basis). We find no evidence of this relationship, which suggests equity markets in countries owning considerable Treasury securities suffered no more or less than equity markets in countries with less U.S. Treasury debt.


Full Text: PDF DOI: 10.5539/ijef.v4n6p3

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

Copyright © Canadian Center of Science and Education

To make sure that you can receive messages from us, please add the 'ccsenet.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.