Global political ties and the global financial cycle

Gene Ambrocio, Iftekhar Hasan and Xiang Li

No 23/2023, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: We study the implications of forging stronger political ties with the US on the sensitivities of stock returns around the world to a global common factor - the global financial cycle. Using voting patterns at the United Nations as a measure of political ties with the US along with various measures of the global financial cycle, we document evidence indicating that stronger political ties with the US amplify the sensitivities of stock returns in developing countries to the global financial cycle. We explore several channels and find that a deepening of financial linkages along with a reduction in information asymmetries and an amplification of sentiment are potentially important factors behind this result.

Keywords: global financial cycle; international spillovers; political ties; stock returns (search for similar items in EconPapers)
JEL-codes: E44 F30 F50 G15 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-int, nep-opm and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/281192/1/1878209191.pdf (application/pdf)

Related works:
Working Paper: Global political ties and the global financial cycle (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:281192

Access Statistics for this paper

More papers in IWH Discussion Papers from Halle Institute for Economic Research (IWH) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().