Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 362

Full Length Research Paper

Political crises and risk of financial contagion in developing countries: Evidence from Africa

Simplice A. Asongu
HEC-Management School, University of Liège, Rue Louvrex 14, Bldg. N1, B-4000 Liège, Belgium.
Email: [email protected]

  •  Accepted: 03 June 2011
  •  Published: 31 July 2011

Abstract

The recent waves of political crises in Africa and the Middle East have inspired the debate over how political instability could pose a risk of financial contagion to emerging countries. With retrospect to the Kenyan political crisis, our findings suggest stock markets in Lebanon, Mauritius were contaminated while Nigeria experienced a positive spillover. Our results have two major implications. Firstly, we have confirmed existing consensus that African financial markets are increasingly integrated. Secondly, we have also shown that international financial market transmissions not only occur during financial crisis; political crises effects should not be undermined.

 

Key words: Political crisis, contagion, developing countries, equity markets.