The Effect of Monetary Policy on Stock Prices: The Subprime Mortgage Crisis

The purpose of this study is to examine the effect of the monetary actions of the Fed during the subprime crisis on stock prices of financial institutions in the United States and to examine whether the Fed has been successful in its efforts to restore the confidence of investors in the market. We will also link the stock reactions of the financial institutions to company-specific variables, in order to see which institutions profited the most from the Fed’s interventions.