We examined the reaction of stock markets around central bank interventions using an event study framework. In the absence of intervention data, we used proxies for central bank intervention. The dataset encompasses monthly observations for 32 countries during the period 1994 to 2015. We estimated abnormal returns by using the traditional market model. Our empirical analysis indicates that all negative abnormal returns following central bank intervention are significant during the currency crises. This might be because the market forces were too strong, and central banks could not handle those. We also examined the central bank intervention in each country, and we documented some stock markets that give significant reactions to intervention events, especially when central banks have a high number of International reserves they can use. The output of this research will fill a gap in knowledge and understanding of how the stock market reacts to such central bank intervention events over the period 1994 through 2015. Eventually, it will add considerations for central banks before doing an intervention and for investors to respond to central bank intervention.

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Hsu, A., & Utami, F. (2016). Central bank intervention and stock market response. International Journal of Business and Administrative Studies, 2(5), 151-161.