Parliamentary Elections and Frontier Stock Markets: Evidence from Stock Market Reaction to General Elections in the Commonwealth Caribbean

20 Pages Posted: 2 Apr 2019

See all articles by C Justin Robinson

C Justin Robinson

University of West Indies, Cave Hill

Prosper Bangwayo-Skeete

University of the West Indies (Cave Hill)

Date Written: March 11, 2017

Abstract

This study is the first to investigate stock price reaction to parliamentary elections in the Commonwealth Caribbean. The study finds that parliamentary elections have a statistically significant effect on stock prices in the Bahamas, Barbados, Jamaica and Trinidad and Tobago, but no effect in the Eastern Caribbean and Guyana. The evidence suggests that equity investors in the Bahamas, Barbados, Jamaica and Trinidad and Tobago have an opinion on the prospects for their investments under different political administrations and these opinions are expressed through the trading of shares around the election cycle. However, the results do not provide support for the notion of an ‘election cycle pat- tern’, that is, a general increase in stock prices around the election cycle, and except in the case of Jamaica, where the stock market appears to disapprove of the People’s National Party (PNP), the results do not provide support for a ‘political party pattern’, that is, a preference among equity inves- tors for a particular political party across the different countries.

Keywords: frontier stock markets, elections, market efficiency, developing countries, Caribbean, thin trading

JEL Classification: G

Suggested Citation

Robinson, C Justin and Bangwayo-Skeete, Prosper, Parliamentary Elections and Frontier Stock Markets: Evidence from Stock Market Reaction to General Elections in the Commonwealth Caribbean (March 11, 2017). Available at SSRN: https://ssrn.com/abstract=3350435 or http://dx.doi.org/10.2139/ssrn.3350435

C Justin Robinson (Contact Author)

University of West Indies, Cave Hill ( email )

Cave Hill
Barbados

Prosper Bangwayo-Skeete

University of the West Indies (Cave Hill) ( email )

Cave Hill
Barbados

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