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Financial market reaction to the end of the right-wing populist government: The case of Poland

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  • Er, Selahattin Tolga
  • Kantorowicz, Jaroslaw

Abstract

While extensive research has examined the impact of populist parties’ electoral victories on financial markets, less is known about the effects of their exit from government. This study addresses this gap by analyzing market response to the democratic transition away from populism in Poland. Leveraging the close competition in Poland’s 2023 general elections as a quasi-experimental framework, we use the event study and synthetic control methods to explore the market reaction to the end of the right-wing populist government. In the short term, we demonstrate a market premium associated with the democratic transition from the right-wing populist bloc to the pro-democratic bloc. Our findings from the synthetic control method corroborate these results, further suggesting enduring positive effects on investor welfare in the longer term.

Suggested Citation

  • Er, Selahattin Tolga & Kantorowicz, Jaroslaw, 2025. "Financial market reaction to the end of the right-wing populist government: The case of Poland," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325001709
    DOI: 10.1016/j.frl.2025.106906
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    More about this item

    Keywords

    Elections; Stock market; Populism; Event study; Synthetic control;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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