Presenter(s)

Michael James Kondritz, Ronald Joseph Marciano

Comments

Presentation: 9:00-10:15, Kennedy Union Ballroom

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Description

Financial economists have long assumed that a rising interest rate environment is favorable to financial institutions because they can lend out at interest rates greater than their cost of capital. In turn, this should result in higher financial sector stock returns. To test this hypothesis I look at four different time periods between 1999 and 2023 where the key Fed Funds rate has risen. I use the top 20 stocks by market cap in the financial sector to evaluate the relationship between rising Fed Fund rates and sector stock returns. A secondary objective is to see how non-bank entities faired, return wise, compared to the banks during these rising interest rate periods.

Publication Date

4-17-2024

Project Designation

Independent Research

Primary Advisor

Robert D. Dean, Jon A. Fulkerson, Henry G. Willmore

Primary Advisor's Department

Economics and Finance

Keywords

Stander Symposium, School of Business Administration

Institutional Learning Goals

Scholarship

Financial sector stock returns in a rising Interest Rate Environment: An Empirical Analysis 1999-2023

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