Document Type
Dissertation
First Faculty Advisor
Ketchum, David
Keywords
Europe; Stock markets; Elections; Risk; Euro
Publisher
Bryant University
Abstract
This paper seeks to provide insight on changes in the European political landscape and how these changes may affect the financial markets in Europe. By analyzing market trends in eight different European countries—Belgium, Austria, France, Germany, Netherlands, Great Britain, Switzerland and Greece—since 1990, this paper attempts to identify any significant relationships between the results of an election and the performances of the major stock indices of these countries. By comparing country index returns starting one hundred days before and ending one hundred days after each election date to a global index, this paper explores the amount of risk in each country’s stock index at times of a political change. It examines the difference in the volatility of stock markets before and after an election occurs both in the short term of five days around the event and over a longer term of one hundred days. It also investigates the impact of the implementation of the Euro on the country indices during a time of an election. The final aspect considered is the effect when there is a switch in political ideology from the controlling party before the election to the incumbent party post-election. By examining these effects around election dates through a regression model, insight is provided into the performances of markets and what investors can expect around upcoming elections.
