Understanding Crime, Political Uncertainty and Stock Market Returns: A case study of the Colombian stock market
Juan Carlos Franco Laverde
, Maria Estela Varua
& Arlene Garces-Ozanne
Published: June 2009
Colombia’s economy has experienced positive growth over the past few years despite the incidence of serious armed conflict in the region. However, the Colombia of today still faces a significant degree of sociopolitical instability as a result of organised crime associated with drug trafficking, the leftist guerrilla attacks and the right-wing paramilitary group. This paper examines the significance of organised crime and political uncertainty for the amalgamated Colombian Stock Exchange. Empirical evidence indicates that organised crime and political uncertainty negatively affect stock market returns and volatility.