Economic crises and a research on stock exchange performances of countries after the 2007 U.S. economic crisis

ABSTRACTMaster?s ThesisEconomic Crises and A Research on Stock Exchange Performances of Countries After The 2007 U.S. Economic Crisisİbrahim KAYADELENDokuz Eylül UniversityGraduate School of Social SciencesDepartment of Business AdministrationFinance ProgramEven though economic crises have huge impact on the country that they are found in, they might affect other economies. This thesis is dedicated to research the impact of the 2007 mortgage crisis on stock exchange performances and observe the characteristics which differenciate the stock exchange performances of countries after the crisis. To be able to find out that indices of nine different countires have been observed within every three months performances beetween the end of September 2007 and 2011 year end. While selecting the markets for research, Greece, Ireland, Portugal and Spain were chosen to represent the Euro crisis; US, Germany, UK and Switzerland were chosen to see the differentiation of powerful economies and finally Turkey was included to understand how Turkey has been performing in recent global economic crisis after the 2001 economic crisis. The returns of indices were calculated by normal cumulative return method. Euro based index was calculated to eliminate the impact of currency rates. All currency rates were taken from interbank market as closing prices. As a result, ISE 100 index has the best performance with %15 return, while ASE index has %86 loss. In Euro based evaluation, Switzerland SMI index jumped into first place because of strong CHF. This research shows that the 2007 mortgage crisis has negative impact on all indices observed in this document. In addition, econonmic overviews of countries, strength of effective reaction can be created against economic crisis, psychological factors of financial decision takers, currency, political and executive conditions of countries strongly influence on the differentiation of stock exchange performances. Moreover, 'time' has also impact on index performances after crisis. This study underlines the 'time' impact on markets, considering that the second best performing country were United States, where the mortgage crisis had begun first.In high level interaction economical environment, considering economical relations and stock exchange performances, it has been getting more and more important to adapt multiple equilibrium systems. If financial authorities keep an eye on these balances, it might be possible to limit the losses in stock exchanges during economic crisis because of having stonger adaption of economies.Keywords: Economic crisis, Economic crises history, Mortgage, Stock exchange performance, Currency Wars