Analysis of the Differential Effect of Brexit on the FTSE Stock and Money Market Performance

Abstract

The objective of this paper is to analyze the differential effect of Brexit on the British stock
market and money market before and after the Brexit referendum. Prior work. Many research articles
have emerged on the economic effect of Brexit, but these papers have largely been predictive in nature;
this paper builds on these prior research and examines what exists rather than being predictive.
Approach. Stock market data and exchange rate data were collected from the London Stock Exchange.
The data were analyzed with the usage of paired t-test of difference in means. Results: Findings from
the analysis show a negative stock value within three days after the referendum, but further analysis
show a positive stock value increase within twenty one days after the Brexit referendum. Additionally,
the t-test results show that the British Pound fluctuated toward a weaker trajectory than the pre-Brexit
period. Implications: Policy makers should shorten the negotiation period for exiting international
integrations to reduce protracted loss of investments. Future searchers should observe more days to
expand this paper’s new result between stock and money market fluctuations. Value: This paper
contributes by examining the difference in fluctuation between stock and money market effects of
Brexit.