Political Volatility and Capital Markets: Evidence from Transition

Christopher Hartwell

No 2015-15, HKUST IEMS Working Paper Series from HKUST Institute for Emerging Market Studies

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.

Keywords: volatility; political institutions; transition; stock markets (search for similar items in EconPapers)
JEL-codes: G20 O43 P30 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2015-03, Revised 2015-03
New Economics Papers: this item is included in nep-pol and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:hku:wpaper:201515

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