Publication detail

The impact of the Brexit vote on UK financial markets: a synthetic control method approach

Author(s): Matěj Opatrný MSc.,
Type: Articles in journals with impact factor
Year: 2020
Number: 0
ISSN / ISBN:
Published in: Empirica
Publishing place: https://doi.org/10.1007/s10663-020-09481-7
Keywords: Brexit, Financial markets, Macroeconomic indicators, Synthetic control method
JEL codes: C10, Q10, Q18
Suggested Citation: Opatrny, M. The impact of the Brexit vote on UK financial markets: a synthetic control method approach. Empirica (2020). https://doi.org/10.1007/s10663-020-09481-7
Grants: GAUK no. 1250218: Fines in the US banks and systemic risk: an asymmetric volatility spillover approach SVV 260 463 - Heterogeneity in Economics and Finance: Strengthening of Doctoral Studies by Securing Excellent pre-gradual Students
Abstract: We estimate how the UK financial markets would have evolved if the Remain camp had won the referendum. To construct the counterfactual, we use the synthetic control method. Our results suggest that there would not have been any significant change in the development of the FTSE 100 Index in the medium to long term if there had not been a referendum. On the other hand, we find a significantly negative effect of 1.2 percentage points on the 10-year bond yield. Given the geopolitical circumstances in mid 2016, financial agents investing in the pound could have sought safer investment options represented by longer-term government bonds, which consequently could result in lower bond yields.

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