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The Role of Political Instability in Stock Market Development and Economic Growth: The Case of Greece

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  • Dimitrios Asteriou
  • Costas Siriopoulos

Abstract

type="main" xml:lang="en"> This article examines empirically the relationship between stock market development, political instability and economic growth in Greece. We measure socio-political instability by constructing an index which captures the occurrence of various phenomena of political violence using time-series data. The main advantages of analysing political instability in a case study framework using time-series, in contrast with the widely used cross-country empirical studies, are: (a) a more careful and in-depth examination of institutional and historical characteristics of a particular country; (b) the use of a data set comprised of the most appropriate and highest quality measures; and (c) a more detailed exposition of the dynamic evolution of the economy. The empirical results indicate the existence of a strong negative relationship between uncertain socio-political conditions and the general index of the Athens Stock Exchange (ASE) and support the theoretical hypothesis that uncertain socio-political conditions affect economic growth negatively, is true for the Greek case. (J.E.L.: G10, G14, O40, C32)

Suggested Citation

  • Dimitrios Asteriou & Costas Siriopoulos, 2000. "The Role of Political Instability in Stock Market Development and Economic Growth: The Case of Greece," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 29(3), pages 355-374, November.
    • Handle: RePEc:bla:ecnote:v:29:y:2000:i:3:p:355-374
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    File URL: http://hdl.handle.net/10.1111/1468-0300.00037
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    1. Amobi, Marilyn Chikaodili, 2007. "Deregulating the electricity industry in Nigeria: Lessons from the British reform," Socio-Economic Planning Sciences, Elsevier, vol. 41(4), pages 291-304, December.
    2. Zwane, Talent & Biyase, Mduduzi & Binda, Thandolwethu, 2021. "Institutions and Technical Efficiency: A Stochastic Frontier Approach," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 74(4), pages 415-438.
    3. Costas Siriopoulos & Sophia A. Kassapi, 2023. "Female Labor Participation and Mother’s Daycare in Greece Pre- and Post-COVID-19 Pandemic: A Regional Analysis," Sustainability, MDPI, vol. 15(14), pages 1-20, July.
    4. Wang, Lu & Ma, Feng & Hao, Jianyang & Gao, Xinxin, 2021. "Forecasting crude oil volatility with geopolitical risk: Do time-varying switching probabilities play a role?," International Review of Financial Analysis, Elsevier, vol. 76(C).
    5. Maran Marimuthu & Hanana Khan & Romana Bangash, 2021. "Is the Fiscal Deficit of ASEAN Alarming? Evidence from Fiscal Deficit Consequences and Contribution towards Sustainable Economic Growth," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
    6. Samitas, Aristeidis & Polyzos, Stathis, 2016. "Freeing Greece from capital controls: Were the restrictions enforced in time?," Research in International Business and Finance, Elsevier, vol. 37(C), pages 196-213.
    7. Papaioannou, Sotiris, 2020. "Political instability and economic growth at different stages of economic development:: historical evidence from Greece," LSE Research Online Documents on Economics 106124, London School of Economics and Political Science, LSE Library.
    8. Aslam Faheem & Awan Tahir Mumtaz & Mohmand Yasir Tariq & Kang Hyoung-Goo & Mughal Khurrum Shahzad, 2021. "Stock Market Volatility and Terrorism: New Evidence from the Markov Switching Model," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 27(2), pages 263-284, May.
    9. Zeeshan, Muhammad & han, Jiabin & Rehman, Alam & Ullah, Irfan & Hussain, Arif & Alam Afridi, Fakhr E., 2022. "Exploring symmetric and asymmetric nexus between corruption, political instability, natural resources and economic growth in the context of Pakistan," Resources Policy, Elsevier, vol. 78(C).
    10. Nianyong Wang & Muhammad Haroon Shah & Kishwar Ali & Shah Abbas & Sami Ullah, 2019. "Financial Structure, Misery Index, and Economic Growth: Time Series Empirics from Pakistan," JRFM, MDPI, vol. 12(2), pages 1-15, June.
    11. Nurudeen Abu & Mohd Zaini Abd Karim & Mukhriz Izraf Azman Aziz, 2015. "Corruption, Political Instability and Economic Development in the Economic Community of West African States (ECOWAS): Is There a Causal Relationship?," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 9(1), March.
    12. Ali M. Kutan & Mehmet E. Yaya, 2016. "Armed conflict and financial and economic risk: evidence from Colombia," Risk Management, Palgrave Macmillan, vol. 18(2), pages 159-187, August.
    13. Mariusz Próchniak, 2013. "To What Extent Is the Institutional Environment Responsible for Worldwide Differences in Economic Development," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 7(3), September.

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