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The Impact of Arab Spring on Stock Market Performance

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  • Abdelbaki, Hisham

Abstract

No doubt that the revolutions of the Arab Spring in Tunisia, Egypt, Libya, Yemen and Syria affect macroeconomic variables and stock markets in the national economy. The revolution in Egypt began by a series of popular movements on Tuesday, January 25, 2011. This paper investigates the impact of political instability, economic instability and external events associated with the Egyptian revolution that started on 25th January, 2011 on the stock market performance. The findings state the correlation between the number of participants sit-in protests, number of participants sit-in factional demands and exchange rate between the Egyptian pound and US$ and the main stock market indexes, EGX30 and EGX70. To achieve the objectives of this paper, the author employ the recently developed techniques of time series data cointegration; Vector Error Correction Model (VECM). The empirical investigations start by examining the basic series properties to the data: structural break, stationarity, cointegration, then constructing the VEC model. The results lend support to the view that political instability plays an important role in effecting the stock markets’ function. However, economic instability came in the second rank.

Suggested Citation

  • Abdelbaki, Hisham, 2013. "The Impact of Arab Spring on Stock Market Performance," MPRA Paper 54814, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:54814
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    References listed on IDEAS

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    1. Massimo Guidolin & Eliana La Ferrara, 2010. "The economic effects of violent conflict: Evidence from asset market reactions," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(6), pages 671-684, November.
    2. Abdelbaki, Professor Hisham, 2013. "The Arab spring: do we need a new theory?," MPRA Paper 54801, University Library of Munich, Germany, revised 2013.
    3. Jian-Guang Shen, 2002. "Democracy and growth: An alternative empirical approach," Development and Comp Systems 0212002, University Library of Munich, Germany.
    4. Leigh, Andrew & Wolfers, Justin & Zitzewitz, Eric, 2003. "What do Financial Markets Think of War in Iraq?," Research Papers 1785, Stanford University, Graduate School of Business.
    5. repec:zbw:bofitp:2002_013 is not listed on IDEAS
    6. Bertrand B. Maillet & Thierry L. Michel, 2005. "The Impact of the 9/11 Events on the American and French Stock Markets," Review of International Economics, Wiley Blackwell, vol. 13(3), pages 597-611, August.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Mr. Philip Barrett & Sophia Chen & Miss Mali Chivakul & Ms. Deniz O Igan, 2021. "Pricing Protest: The Response of Financial Markets to Social Unrest," IMF Working Papers 2021/079, International Monetary Fund.
    2. Hani El-Chaarani, 2019. "The Impact of Oil Prices on Stocks Markets: New Evidence During and After the Arab Spring in Gulf Cooperation Council Economies," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 214-223.
    3. Mai Ahmed Abdelzaher, 2019. "The Impact of January Events on Stock Performance in the Egyptian Stock Market," Accounting and Finance Research, Sciedu Press, vol. 8(1), pages 174-174, February.
    4. Ghosh, Saibal, 2016. "Political transition and bank performance: How important was the Arab Spring?," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 372-382.
    5. Zeravan Abdulmuhsen Asaad & Amjad Saber Al-Delawi & Omed Rafiq Fatah & Awaz Mohamed Saleem, 2023. "Oil Exports, Political Issues, and Stock Market Nexus," International Journal of Energy Economics and Policy, Econjournals, vol. 13(1), pages 362-373, January.
    6. Rasha Tawfiq Abadi & Florinda Silva, 2022. "Do Islamic fundamental weighted indices outperform their conventional counterparts? An empirical investigation during the crises in the MENA region," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(2), pages 241-266, June.
    7. Hussain A. Bekhet & Jad Alkareem Alhyari & Nora Yusma Mohamed Yusoff, 2020. "Highlighting Determinants of Financial Performance of the Jordanian Financial Sector: Panel Data Approach," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(6), pages 237-252, December.
    8. Kiryl Rudy, 2023. "The Exchange Rate Volatility During Political Protests: Event Study and the Case of Belarus," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 15(9), pages 1-37, September.

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    More about this item

    Keywords

    Arab spring; stock market performance; vector error correction model (VECM); Egypt.;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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