How is financial stability impacted by political and economic stabilities in emerging markets? A dynamic panel analysis

ERTUĞRUL H. M., Ozun A., Kirikkaleli D.

Romanian Journal of Economic Forecasting, vol.22, no.4, pp.148-159, 2019 (SSCI) identifier

  • Publication Type: Article / Article
  • Volume: 22 Issue: 4
  • Publication Date: 2019
  • Journal Name: Romanian Journal of Economic Forecasting
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.148-159
  • Keywords: BRICT countries, Dynamic panel data analysis, Economic stability, Financial stability, Political stability
  • Anadolu University Affiliated: No

Abstract

In this paper, we investigate the impacts of political and economic stability on financial stability in the BRICT countries, namely Brazil, Russia, India, China and Turkey, by using dynamic cross-sectional analysis based on quarterly panel data sets. In the present study, we mainly employ the common correlated effects group mean (CCEGM) model, which adds a dynamic nature to panel data analysis. The empirical results show that there is a strong effect from political risk and economic deterioration towards financial stability. We discuss the policy implications of the findings for the emerging markets. Additionally, the applied methodology allows us to produce empirical findings for each country, thus facilitating country-specific discussions.