Whose speeches impact European markets: ECBs' or the national central banks'?

Abstract

We quantify the tone from the speeches of the European Central Bank as well as that from the national central banks of six leading European nations, and analyze their role in explaining the returns of their respective stock market indices. Using innovations in text analysis and tone quantification introduced in Anand et al. (2021), we find evidence that the ECB and the national central bank speeches exert significant influence on their respective national stock market index returns - both individually and jointly. For our sample of European countries, we show that the ECB and the national central bank speeches have near equal significance in impacting their respective national market indices.