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Pricing protest: the response of financial markets to social unrest

Author

Listed:
  • Philip Barrett
  • Mariia Bondar
  • Sophia Chen
  • Mali Chivakul
  • Deniz Igan

Abstract

We identify start days of 156 episodes of social unrest from textual analysis of media reports and show a systematic negative impact of social unrest on stock market performance. Social unrest on average leads to a 1.4 percentage point drop in cumulative abnormal returns in 2 weeks, more for events that last longer and that happen in emerging markets. Stronger institutions, particularly better governance and more democratic systems, are associated with a smaller adverse impact of social unrest on stock market returns. We argue this reflects the ability of better institutions to provide a more reliable way to reconcile conflicting views and dampen uncertainty after unrest.

Suggested Citation

  • Philip Barrett & Mariia Bondar & Sophia Chen & Mali Chivakul & Deniz Igan, 2024. "Pricing protest: the response of financial markets to social unrest," Review of Finance, European Finance Association, vol. 28(4), pages 1419-1450.
    • Handle: RePEc:oup:revfin:v:28:y:2024:i:4:p:1419-1450.
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    File URL: http://hdl.handle.net/10.1093/rof/rfae008
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    Cited by:

    1. Hadzi-Vaskov Metodij & Pienknagura Samuel & Ricci Luca Antonio, 2023. "The Macroeconomic Impact of Social Unrest," The B.E. Journal of Macroeconomics, De Gruyter, vol. 23(2), pages 917-958, June.
    2. Diakonova, Marina & Molina, Luis & Mueller, Hannes & Pérez, Javier J. & Rauh, Christopher, 2024. "The information content of conflict, social unrest and policy uncertainty measures for macroeconomic forecasting," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(4).
    3. Boungou, Whelsy & Gupta, Praveen & Wahyono, Budi, 2024. "Coup d'état in Africa and stock market returns: The case of French companies," Economics Letters, Elsevier, vol. 237(C).
    4. Madeira, Carlos, 2025. "The impact of financial crises on industrial growth in the Middle East and North Africa," Global Finance Journal, Elsevier, vol. 65(C).
    5. Piserà, Stefano, 2024. "Hidden effects of Brexit," Research in International Business and Finance, Elsevier, vol. 67(PB).
    6. Barrett, Philip & Appendino, Maximiliano & Nguyen, Kate & de Leon Miranda, Jorge, 2022. "Measuring social unrest using media reports," Journal of Development Economics, Elsevier, vol. 158(C).
    7. repec:cam:camjip:2413 is not listed on IDEAS
    8. Ghosh, Saibal, 2023. "Social unrest and corporate behaviour during the Arab Spring period," The Journal of Economic Asymmetries, Elsevier, vol. 27(C).
    9. Kiryl Rudy, 2024. "Political Effects on FDI in the CEE Region: Two Cases of Connectivity and Decoupling from the West," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 16(2), pages 149-167, May.
    10. Peterson K. Ozili, 2025. "Country-wide protests and financial stability," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 17(1), pages 1-25.
    11. Madeira, Carlos, 2022. "The impact of the Chilean pension withdrawals during the Covid pandemic on the future savings rate," Journal of International Money and Finance, Elsevier, vol. 126(C).

    More about this item

    Keywords

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    JEL classification:

    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • E70 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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