How did investors in the United States financial market react to the Evergrande Crisis?

Author

Katherine ChenFollow

Graduation Year

2023

Date of Submission

12-2023

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

William Lincoln

Abstract

Did US investors and the American public believe that there would be a contagion effect from the Evergrande crisis to American firms? This paper aims to explore the extent to which American investors reacted adversely to the Evergrande crisis through an event study analysis. The results of the event study show that abnormal returns on September 22^nd is statistically significant at the 10% level and negative (-0.0111). However, when compared to returns during the estimation window, the magnitude of this abnormal return is essentially zero. I tentatively conclude that US investors did not have a significantly negative reaction to the Evergrande event on September 22^nd. This may be explained by the long span of the Evergrande crisis with several events warning investors early as well as the low value of investment of American firms in the Chinese real estate sector.

Recommended Citation

Chen, Katherine, "How did investors in the United States financial market react to the Evergrande Crisis?" (2023). CMC Senior Theses. 3126.
https://scholarship.claremont.edu/cmc_theses/3126