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Was the collapse of the communist bloc a game changer in the stock markets? Left-wing vs. right-wing political preferences and stock market development

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  • Geller, Gabriel
  • Guedes, Maria João Coelho

Abstract

The fall of communism in Eastern Europe is a historical event which had political, social and economic repercussions worldwide. Our research examines the association between stock market development and the way that left/right-wing power was exercised. Our results show that this historical event was a game changer! Up until the fall of the communist bloc in 1991, the power of the left was negatively associated with stock market development, however over the post-fall period this association becomes positive. Additionally, our findings also show that the left/right-wing conflict is only determinant in the case of emerging economies, which may be explained by the fact that these countries are less-developed institutionally and economically, and thus provide more scope for political preferences to overcome institutions.

Suggested Citation

  • Geller, Gabriel & Guedes, Maria João Coelho, 2017. "Was the collapse of the communist bloc a game changer in the stock markets? Left-wing vs. right-wing political preferences and stock market development," Research in International Business and Finance, Elsevier, vol. 39(PA), pages 423-432.
    • Handle: RePEc:eee:riibaf:v:39:y:2017:i:pa:p:423-432
    DOI: 10.1016/j.ribaf.2016.09.002
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