ARCHIVES
VOL. 10, ISSUE 3 (2024)
Examine how political and economic uncertainty influences stock market volatility and investor behaviour
Authors
Anurag Singh Parihar, Gyan Chandra Gupta
Abstract
This research paper explores the intricate relationship between political
and economic uncertainty and its impact on stock market volatility and investor
behavior. Utilizing a comprehensive dataset spanning multiple geopolitical
events and economic fluctuations over the past two decades, this study employs
econometric models to quantify the effects of uncertainty on market dynamics.
The analysis delves into how political events, such as elections, policy
changes, and geopolitical tensions, as well as economic uncertainties like
inflation, recessions, and monetary policy shifts, contribute to market
instability. Furthermore, the paper examines investor behavior during periods
of heightened uncertainty, drawing on behavioral finance theories to understand
shifts in risk tolerance, herd behavior, and decision-making processes. The
findings indicate a significant correlation between uncertainty and increased
market volatility, highlighting the role of investor sentiment and
psychological factors in exacerbating market reactions. The study contributes
to the existing literature by providing a nuanced understanding of the
mechanisms through which uncertainty influences market behavior, offering
practical insights for enhancing market stability and investor confidence.
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Pages:31-35
How to cite this article:
Anurag Singh Parihar, Gyan Chandra Gupta "Examine how political and economic uncertainty influences stock market volatility and investor behaviour". International Journal of Commerce and Management Research, Vol 10, Issue 3, 2024, Pages 31-35
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