The impact of FED interest rate decisions on stock markets: An application on developing countries

In this study, the impact of FED interest rate decisions on stock markets is examined. Based on the stock market closing data of a sample of 18 developing countries from 2016 and using 'Case Study Method', this study aimed at analysing to what extent the stock markets of these sample countries were impacted by the decisions from FED meetings in 2016. While some research has been carried out on FED interest systems and FED monetary policy, no studies have been found which looked at the impact of FED interest rate decisions on financial markets. The results of this present study suggest that FED interest rate decisions have no impact on other countries' financial markets. No significant increase or decrease was observed in the cumulative abnormal returns of the stock markets of the analysed sample of 18 developing countries beforehand and in the aftermath of FED meetings which generally take place eight times a year. Keywords: Federal Reserve System, Policy Interest Rates, Cumulative Abnormal Return, Case Study Method