Northern Ireland in turmoil: a quantitative analysis of the impact of the Troubles on the Irish Stock Market

This dissertation studies the effects of the Troubles on the Irish Stock Exchange. Our research contributes to the literature first by applying empirical methods to investigate the impact of significant historical events on the Irish Stock Exchange. We employ an event study and descriptive statistics to test the significance of negative events such as bombings, shootings and riots, and positive events such as peace negotiations in the conflict. In the aftermath of events that were expected to exacerbate the conflict we expect investors to react negatively and market prices to fall, while observing the reverse effect when events that were expected to alleviate the crisis occurred. Secondly, this study contributes to the literature by employing a primary dataset which has been used previously by only one study. Our analysis displays that while the developments in the conflict did influence the Irish Stock Exchange, it was relatively limited and was not the dominant factor in explaining the behaviour of the market. The main driver of the market was major international developments such as exchange rate changes, the 1987 stock market crash, the collapse of the Bretton Woods System and the Gulf Conflict. We do acknowledge that the period following the Good Friday Agreement exhibited positive significant returns, indicating investors believed that the agreement would have positive effects for the Irish economy. However, on balance the Irish stock market was generally not affected by events in the Troubles, no matter how devastating and emotive the events were.