IUP Publications Online
Home About IUP Magazines Journals Books Archives
     
Recommend    |    Subscriber Services    |    Feedback    |     Subscribe Online
 
The IUP Journal of Applied Economics
The Effect of Political Instability and Terrorism on Tunisian Financial Market
:
:
:
:
:
:
:
:
:
 
 
 
 
 
 

This paper aims to investigate the effect of political instability and terrorism on Tunisian financial market. Estimation of Power ARCH model between 2005 and 2015 provides support for the negative effect of informal political instability (assassinations and revolution), formal political instability (major government crises and a number of major constitutional changes) and terrorism on the Tunisian financial market. Moreover, the results highlight assassination as a source of political risk, as it has more significant and greater effect on stock market returns as compared to other sources of political instability. Thus, this result is very important for government authorities who should create a security system for all people and in particular for the members of the political parties to ensure the stability and performance of the Tunisian financial market.

 
 
 

The occurrence of the phenomenon of political instability and terrorism observed around the world raises the question of their complex repercussions on the financial markets. Given the lack of studies focusing on the reaction of financial markets to these events, the present paper explores this aspect with reference to the Tunisian financial market, characterized by the phenomenon of political instability after the revolution of 2011.

Tunisia experienced a number of terrorist attacks, anti-government protests and election periods, especially during the post-revolution period. Indeed, during the period between the end of December 2010 and the beginning of January 2011, many anti-government protests were held, leading to the fall of the totalitarian regime of ‘Zine el-Abidine Ben Ali’ and the killing of more than 300 people. The events of political instability continued in Tunisia in the year 2013 with two general strikes. The first strike occurred on February 6, 2013 following the assassination of ‘Chokri Belaid’. This assassination provoked violent demonstrations. The second general strike occurred on July 25, 2013 following the assassination of ‘Mohamed Brahmi’ (representative in the constituent national assembly) where the demonstrators demanded the departure of the government.

 
 
 

Applied Economics Jouranl,The effect of political instability ,Terrorism on Tunisian financial market,Estimation of Power ARCH model,Performance of the Tunisian financial market.