Test of Linkage between Governance Style and National Economic Indices

Sharlywest Uwabor Eboigbe and Innocent Okwuosa

International Journal of Financial Research, 2018, vol. 9, issue 1, 226-238

Abstract: The relationship between the deliberate reinvention of the wheel, for macroeconomic indices such as interest rate, inflation, exchange rate, stock prices, index of industrial output within the electoral windows and the political parties¡¯ (incumbent and opposition) ideology is the focus of this study. Monthly macroeconomic data for UK, USA, Japan, China, Hong Kong, Egypt, South Africa, Brazil, Nigeria, France and Germany from Morgan Stanley Capital International (MSCI) as well as World Bank for the period of 2000-2015 were used in the study. Employing majorly, the dynamic Genaralized Method of Moment (GMM) estimation technique, the study reveals that the coefficients of partisanship effects have the same negative signs and is significant for all the countries except Nigeria and Egypt. Also, the coefficients are similar in terms of size (US and China). Hence, the results show that party orientation does have significant impact on stock market returns of the selected countries with greater impact on Nigeria and Egypt. Strengthening the various regulatory agencies in charge of these macroeconomic policies is recommended to avoid this uncessary manoeuvring in governance. We are of the view that automation of capital markets activities will reduce the chances of manipulating capital market economic data.

Keywords: election; macro economic indices; monetary policy; capital market efficiency; partisanship; governance style (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:9:y:2018:i:1:p:226-238

DOI: 10.5430/ijfr.v9n1p226

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