Political Crises and the Stock Market Integration of Emerging Markets

26 Pages Posted: 4 Dec 2010

See all articles by Alireza Tourani-Rad

Alireza Tourani-Rad

Auckland University of Technology - Faculty of Business & Law

Bart Frijns

Auckland University of Technology - Faculty of Business & Law

Ivan Indriawan

Auckland University of Technology - Department of Finance

Date Written: November 2, 2010

Abstract

This paper investigates the role of political crises in explaining the change in the degree of stock market integration for emerging markets over the period 1991-2006. Using a unique database, the International Crisis Behavior database, which contains detailed information about political crises around the world, we assess whether political crises affect stock market integration for 19 emerging markets from Far East Asia, Latin America and Eastern Europe. We find that crises and their characteristics significantly reduce the level of stock market integration for these regions. In particular, the start of a political crisis, its severity, US involvement in the conflict and the number of actors involved in the crisis all have a significant impact on the level of stock market integration for the emerging markets in each region.

Keywords: Stock Market Integration, International Crises, Emerging Markets

JEL Classification: F36, G15

Suggested Citation

Tourani-Rad, Alireza and Frijns, Bart and Indriawan, Ivan, Political Crises and the Stock Market Integration of Emerging Markets (November 2, 2010). Finance and Corporate Governance Conference 2011 Paper. Available at SSRN: https://ssrn.com/abstract=1719306 or http://dx.doi.org/10.2139/ssrn.1719306

Alireza Tourani-Rad (Contact Author)

Auckland University of Technology - Faculty of Business & Law ( email )

3 Wakefield Street
Private Bag 92006
Auckland Central 1020
New Zealand

Bart Frijns

Auckland University of Technology - Faculty of Business & Law ( email )

3 Wakefield Street
Private Bag 92006
Auckland Central 1020
New Zealand

Ivan Indriawan

Auckland University of Technology - Department of Finance ( email )

AUT City Campus
Private Bag 92006
Auckland, 1142
New Zealand

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