Graduation Year
2024
Date of Submission
12-2023
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics-Accounting
Reader 1
Andrew Finley
Terms of Use & License Information
Rights Information
© 2023 Payton M. Earl
Abstract
This paper examines if there is an inverse correlation between Bitcoin’s most volatile price swings and national commercial banks and security brokers, exchanges and service companies performance. Company performance in the dataset is measured by Cumulative Abnormal Returns during 2021 within a two-day period where Bitcoin has had the most significant uptick and downtick events. Using a market-adjusted model for my regression, it is concluded that Bitcoin’s largest uptick event did indeed have an inversely negative effect on traditional banks and trading securities companies, as the Cumulative Abnormal Returns were negative for my 107 observations and the event was statistically significant. Additionally it concluded that Bitcoin’s largest downtick event had little to zero correlation and impact on the Cumulative Abnormal Returns for my observations and was not statistically significant. However this led me to speculate further that in times of economic turmoil specifically concerning the largest dip for Bitcoin in 2021 that banks react quickly to negative price movements in Bitcoin which allows them to maintain a stable foundation. Finally the paper concludes that for future event analysis of its own significance it is important to capture all elements desired of bank information, as leaving out certain information can lead to omitted variable bias.
Recommended Citation
Earl, Payton, "Market Reaction Test on Banks & Brokers Based on Bitcoin Price History. A Look at National Commercial Banks and Security Broker, Exchanges, and Service Stocks following the most volatile swings in Bitcoin’s Price." (2024). CMC Senior Theses. 3444.
https://scholarship.claremont.edu/cmc_theses/3444
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Accounting Commons, Business Law, Public Responsibility, and Ethics Commons, Corporate Finance Commons, Finance and Financial Management Commons, International Business Commons, Portfolio and Security Analysis Commons
