Evaluation of the Impact of Financial Crisis on Stock Market

Abstract

During 2007-08, the US financial crisis which triggered by the subprime mortgage crisis, eventually influenced the global financial market. The US economy was heavily hit by the financial crisis, which leaded to a recession as a consequence. Thus, the aim of this thesis is to evaluate the impact of the 2007-08 financial crisis on the US stock market, by using econometrics. In this thesis, the dependent variable is the stock index S&P500's closing price, and the indepedent variables include unemployment rate, inflation rate, interest rate, volume that traded in the stock market, and money supply. The above data are all chosen from 2000 to 2016. And we divided the data into three periods, before, during and after crisis, in order to see how financial crisis influenced the stock market.