This paper examines the relationship between political instability and stock market returns using quarterly time series data from 1993 to 2013. In this paper, stock market returns are defined as the returns of the general stock market index and banking index for 18 OECD countries. Five different political instability indicators are constructed in order to measure political uncertainty. The empirical part utilizes the EFA, PCA and GARCH-M methodologies. The findings indicate a direct and an indirect impact between the PI indicators and the returns of the Banking Index and the Overall Stock Market Index. The research contributes to the literature by providing empirical evidence to policy makers on the effects that political instability has on stock markets.
This paper examines the impact of the financial crisis and economic recessions on bank shares compared to the overall stock market index for 18 OECD countries from 1993 to 2015. The empirical methodology utilizes the changes-inchanges approach. We compare and contrast the returns of the banking stock price index (treatment group) in each country with their general stock price index (control group), which experiences smaller changes. Our results suggest that bank returns on average perform significantly worse than that of the general stock price index during recessions. In addition, we also find significantly greater volatility in bank share returns.
This paper focuses on the synchronization of business cycles among European Union countries. The co-movements of economic growth and foreign direct investments are examined for the EU Three different periods of business cycles are compared and three sub-groups for the sample and the whole period are constructed, a core and a periphery group as in Campos and Macchiarell, Economics Letters, 2016, 147, 127-130, and a new entry group. To assess the robustness of the results, the business cycles were estimated by using the Hodrick-Prescott,
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