Political Uncertainty and Finance: A Survey

Asia-Pacific Journal of Financial Studies, Vol. 48, No. 3, 307-333, 2019

43 Pages Posted: 21 Jun 2019 Last revised: 23 Mar 2020

See all articles by Lili Dai

Lili Dai

University of New South Wales (UNSW)

Bohui Zhang

The Chinese University of Hong Kong, Shenzhen

Date Written: June 12, 2019

Abstract

An emerging stream of literature investigates the impact of political uncertainty on financial markets. In this survey, we review this line of literature from four perspectives, namely, asset prices, corporate policies, financial intermediaries, and economy and households, suggesting that political uncertainty generally increases market friction and as a result changes corporate behavior and adversely affects the economy. At the end of the survey, we discuss a few future directions worth being explored in view of the relationship between political uncertainty and finance.

Keywords: Political uncertainty, Asset prices, Corporate policies, Financial intermediaries, Economy, Households

JEL Classification: G12, G18, G21, G28, G34, G38

Suggested Citation

Dai, Lili and Zhang, Bohui, Political Uncertainty and Finance: A Survey (June 12, 2019). Asia-Pacific Journal of Financial Studies, Vol. 48, No. 3, 307-333, 2019, Available at SSRN: https://ssrn.com/abstract=3402925 or http://dx.doi.org/10.2139/ssrn.3402925

Lili Dai (Contact Author)

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

HOME PAGE: http://sites.google.com/site/ldaiprofile

Bohui Zhang

The Chinese University of Hong Kong, Shenzhen ( email )

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