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Political Volatility and Capital Markets: Evidence from Transition

Author

Listed:
  • Christopher Hartwell

    (Department of International Management, Kozminski University
    Institute for Emerging Market Studies, Hong Kong University of Science and Technology
    Center for Social and Economic Research, Warsaw)

Abstract

This paper looks at the effects of political volatility in transition economies to ascertain how nascent political institutions affect fledgling capital markets. Asymmetric (GJR) GARCH modeling of monthly data was taken for 21 transition economies on financial volatility, political volatility, and monetary policy to test the drivers of financial volatility in transition. The key implication from these results is that political stability needs to be tended to both in the formal realm and the informal realm in order to avoid potentially damaging financial volatility. The need for consistent political institutions remains in transition economies as much as in developed countries.

Suggested Citation

  • Christopher Hartwell, 2015. "Political Volatility and Capital Markets: Evidence from Transition," HKUST IEMS Working Paper Series 2015-15, HKUST Institute for Emerging Market Studies, revised Mar 2015.
    • Handle: RePEc:hku:wpaper:201515
    as

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    References listed on IDEAS

    as
    1. Christopher A. Hartwell, 2013. "Institutional Barriers in the Transition to Market," Studies in Economic Transition, Palgrave Macmillan, number 978-1-137-32371-2, February.
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    More about this item

    Keywords

    volatility; political institutions; transition; stock markets;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General

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