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
Date Written: June 12, 2019
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: Suggested Citation