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

Selahattin Tolga Er and Jaroslaw Kantorowicz

Finance Research Letters, 2025, vol. 76, issue C

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.

Keywords: Elections; Stock market; Populism; Event study; Synthetic control (search for similar items in EconPapers)
JEL-codes: D72 G12 G14 G17 G18 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325001709

DOI: 10.1016/j.frl.2025.106906

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