| 30.11.2023

Doctoral thesis: Uncertainty around policy makers’ actions influences the financial market heavily

As uncertainty associated with the actions of policy makers is increasing around the global, it is having a significant impact on the financial markets. Whether it be the weekly dynamics in the corporate bond market or the trades of intuitional investors and mutual funds, policy uncertainty is having a profound and persistent impact.

In his doctoral thesis Essays on the Impact of Policy Uncertainty on the Financial Markets, Ali Malik examines the impact of policy uncertainty on the trading of various financial assets and on the portfolios of institutional investors.

Policy related uncertainty has a significant impact on the asset prices. In his thesis Malik finds that proximity to Federal Open Market committee (FOMC) announcements has a significant impact on the corporate bond dynamics. Institutional investors time their trades on the basis of proximity of FOMC cycle week to the FOMC announcement day. Further, FOMC-related uncertainty and announcements generate predictable patterns in the weekly bond return dynamics.

 “I found that uncertainty associated with the actions of policy makers (e.g., government) at the national level e.g., monetary and fiscal policy has a significant and persistent impact on the trades of financial assets and their returns.”
Malik also evaluates the impact of uncertainty associated with monetary policy announcements on the ability of mutual fund managers to generate superior performance i.e., generate above average returns. Evaluating mutual funds managers consistency over uncertain FOMC announcements is quite a novel perspective.
“My research is quite pioneering as I measure how consistency around uncertain economic events affects investor capital allocation,” says Malik.

You can read the whole thesis here:

Essays on the Impact of Policy Uncertainty on the Financial Markets

Ali Malik will be publicly defending his thesis at 16:00 on Tuesday, 5 December on Teams. Join via this link:
Ali Malik docoral defence

Opponent: Professor Turan G. Bali, McDonough School of Business, Georgetown University
Custos: Gonul Colak, Hanken School of Economics