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Financial Market Reactions to the Political Uncertainty. Study Case: Romania

Author

Listed:
  • Luciana Simion

    (Bucharest University of Economic Studies)

  • Georgiana-Loredana Schipor

    (“Ovidius†University of Constanta)

Abstract

The goal of this paper is to identify the influence of the economic policy and political uncertainty on the Romania stock market. We used the Bollinger Bands set at two standard deviations and Bollinger Bandwidth Indicator in order to emphasize volatility. By applying technical indicators on the BET-XT index between 2018 – 2020, the findings show that political uncertainty influences the index evolution. Our study shows that the magnitude of the impact of policy measures is stronger than the impact of events such as presidential, local or European parliamentary elections, cabinet formation and dissolution. The study reveals an asymmetry of the index volatility, in the sense that unexpected “shock†type events with negative impact determined a much higher volatility. The SPSS analysis reveals the indirect correlation between the number of COVID-19 daily registered cases in Romania, as major panic factor at the beginning of the pandemic, and the BET-XT evolution.

Suggested Citation

  • Luciana Simion & Georgiana-Loredana Schipor, 2020. "Financial Market Reactions to the Political Uncertainty. Study Case: Romania," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 1072-1080, December.
    • Handle: RePEc:ovi:oviste:v:xx:y:2020:i:2:p:1072-1080
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    References listed on IDEAS

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    More about this item

    Keywords

    political uncertainty; volatility; financial market; BET-XT;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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