Democracy, political risks and stock market performance

Heikki Lehkonen and Kari Heimonen

Journal of International Money and Finance, 2015, vol. 59, issue C, 77-99

Abstract: This study examines the impacts of democracy and political risk on stock market. Using annualized panel data for 49 emerging markets for 2000–2012 we find evidence that democracy and political risk do have impact on stock market returns and the relationship between democracy and political risk is parabolic, i.e., there is a threshold level of democracy after which political risk begins to decline. Also our results suggest that decreases in political risk lead to higher returns.

Keywords: Democracy; Political risk; Emerging markets; Stock market performance (search for similar items in EconPapers)
JEL-codes: F52 G12 G15 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (61)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:59:y:2015:i:c:p:77-99

DOI: 10.1016/j.jimonfin.2015.06.002

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