Political Crises and Risk of Financial Contagion in Developing Countries: Evidence from Africa
Published in: Journal of Economics and International Finance, 3(7), pp. 462-467 (2011, July).
14 Pages Posted: 9 Sep 2014 Last revised: 1 Apr 2015
Date Written: April 3, 2011
The recent waves of political crises in Africa and the Middle East have inspired the debate over how political instability could pose a risk of financial contagion to emerging countries. With retrospect to the Kenyan political crisis, our findings suggest stock markets in Lebanon, Mauritius were contaminated while Nigeria experienced a positive spillover. Our results have two major implications. Firstly, we have confirmed existing consensus that African financial markets are increasingly integrated. Secondly, we have also shown that international financial market transmissions not only occur during financial crisis; political crises effects should not be undermined.
Keywords: Political crisis; Contagion; Developing countries; Equity Markets
JEL Classification: G10; G15; F30
Suggested Citation: Suggested Citation