Impact of US on Chinese and Indian Stock Markets Post Asian Financial Crisis

Abstract

The multivariate relationship between India, USA and China between 1997-2019 has been studied with the help of Granger Causality. The primary objective of the study has been to find out causal nexus between Indian, Chinese and US stock markets after the Asian financial crisis. The weekly data points revealed that there exists a causal effect from USA to India and China. Also, it has been found that there is a causal linkage running from India to China. However, the reversal may not hold good significantly. The rising linkages between the three economies may be the core driver for influencing the inter-relationship between their stock markets. It also reflects that developed nation has been able to cause developing nations even in an integrated economy.