Topic

Political Institutions and Stock

Market Resilience
1. Introduction
2. Empirical Evidence
3. Literature Review of
China,Thailand,India,Pakistan &
Japan
4. Research Objectives
5. Research Techniques
6. Research Methodology
7. Research Significance
8. Conclusion
Introduction
Political Institutions and Stock Market Resilience
Strong political institutions (e.g. rule of law,
democratic governance) promote:
 Investor confidence
 Economic stability
 Effective regulation
 Reduced political risk
Weak political institutions lead to:
 Increased uncertainty
 Political instability
 Economic volatility
 Reduced investor confidence
Stock Prices and Economic Policy
Uncertainty Economic policy uncertainty
has a significant impact on stock prices

Increased uncertainty leads to:

Decreased stock prices

Increased volatility
Clustering of observations around periods
of high economic policy uncertainty
Positive correlation between stock prices
and economic policy uncertainty
 Strong political institutions lead to:
 Increased foreign direct investment (FDI) Improved
human development and education
 Enhance innovation and entrepreneurship
 Reduced poverty and income inequality
Political institutions matter for economic growth:
Rule of law and property rights protection attract
investment
Effective governance and corruption control boost
investor confidence
Stable political environment encourages long-term
investment
Empirical Evidence

Studies have shown that countries with strong political

institutions experience:

•Lower stock market volatility

•Faster recovery from financial crises
•Greater foreign investment
•Improved economic growth
Literature Review
Islamic Finance vs. Stock Markets (ISM)
Investment principles:
Islamic Finance:
1. Halal (permissible) investments
2. No Riba (interest)
Stock Markets (ISM):
3. No restrictions
4. interest allowed
Debt financing:
Islamic Finance: Limited, no excessive debt
Stock Markets (ISM): Common, high leverage allowed
Islamic Stock Market focus on:
 Innovation technology telecommunications
 Healthcare
 consumer goods
 construction and real estate

Benefits
 Islamic finance is ownership-based
 and asset-driven
 low leverage ratio
 need low interest rates
 less volatile
Theory and themes: governance for urban resilience
Theories
•Social-ecological systems
•Urban political economy
•Institutional collective action
Themes:
•Collaborative governance
•Adaptive capacity
•inclusive decision-making
•Multi-level governance
•Public-private partnerships
•Community engagement and participation
•Risk management and adaptation
• Urban planning and design
Thailand literature Review
Thailand's Healthcare System
and Stock market Resilience
 Ministry of Public Health is the
primary healthcare provider
 Public sector controls majority of healthcare system
 Universal health coverage with high financial risk protection
and little unmet healthcare need
 Robust government health systems with dense health
workforce
 Programs to encourage students from remote areas to pursue
careers in nursing and medicine- Field Epidemiology
Training Program for zoonotic disease surveillance and
management
 Thailand's stock market is a fast-emerging market in Asia,
playing a vital role in boosting the economy (Chaiyasit, 2020)
 GDP growth fluctuations: 2009 (-1.19%), 2010 (6.99%), 2012
(6.7%), 2014 (0.55%), and 2017 (3.66%) (World Bank, 2020)
 Stock market development (SMD) contributes to economic
growth (EG) and is a good indicator of EG (Wongsurawat,
2017)
Financial Distress in Pakistan: Urbanization,
Resilience, and Prediction
Factors contributing to financial distress in Pakistan
include:
Low liquidity, excessive debt, low profitability, and
diminishing cash flows
Economic downturns, industry-specific difficulties, and
unfavorable market conditions
Insufficient management techniques and strategic errors
Financial ratios (profitability, solvency, liquidity) and
macroeconomic variables (GDP growth, interest rates,
inflation) are significant indicators of future financial
distress.
Good governance practices can mitigate financial
hardship.
Research gaps:
Longitudinal studies needed to understand
the development of financial distress in
Pakistan. Institutional and cultural quirks
of Pakistan's business environment require
further exploration.
Policy recommendations:
Stakeholders should monitor financial ratios
and macroeconomic variables to take
proactive measures against financial distress.

Regulators and policymakers can use

research findings to create long-term plans
for handling financial crises.
India's Economic Recovery and Resilience
-India faces a complex economic crisis, exacerbated
by the pandemic, with unique challenges compared to
developed economies.
-To recover and achieve sustained high growth, India
needs effective fiscal and monetary policies, agile
trade policies, and long-term resilience.
-Key obstacles include geopolitical, geo-economics,
and strategic challenges, as well as managing the
economic crisis.
literature review of Japan's political institutions
and stock market
•Resilience in Japan's Stock Market: Japan's stock market
has shown resilience in the face of challenges, with the Bank
of Japan playing a crucial role in maintaining financial
stability.

•Political Institutions: Political institutions, such as the

Ministry of Finance, have been involved in shaping the
country's economic policies and capital markets.
Stock Market Resilience Factors of china
Government Support: Established stock exchanges to
discourage unorganized trading.-
Regulatory Framework: Implemented policies to prevent
bank funds from flowing into the stock market
Market Diversification: Multiple markets, including money,
capital, and derivative markets, contribute to resilience.
Participant Diversity: Retail investors, mutual funds,
sovereign wealth funds, and qualified foreign institutional
investors contribute to market resilience.
Political institution of China
State Council: Chief administrative body, oversees government
ministries and agencies
Communist Party of China (CPC) Central Committee: Top
decision-making body, sets party policies and direction-
People's Liberation Army (PLA): Military force, plays
significant role in national security and political affairs
Research Objectives
Analyze the impact of political institutions on stock market
resilience in China, Japan, Pakistan, India, and Thailand
Examine the effects of political institutions on poverty
alleviation, economic growth, and environmental
sustainability
Investigate the factors influencing stock market resilience,
including:
 Stability of governance
 Regulatory frameworks
 Transparency Rule of law
Research Techniques:-
Comparative analysis of political institutions and
stock market performance across countries-

Case studies of significant political and economic

events affecting stock markets

Content analysis of policy documents, news articles,

and social media to assess transparency and
governance
Research Significance:
Informed decision-making: Understanding the relationship
between political institutions and stock market resilience can
aid decision-
makers and investors in making informed decisions.-
Policy initiatives: Identifying political and economic factors
that support stock market resilience can inform policy
initiatives aimed at promoting financial stability.
 Methodology:
Comparative Case Study Analysis:
In order to find patterns distinctions and causal
relationships comparative case study analysis looks at
several cases in this case the stock markets of China Japan
Pakistan India and Thailand. Scholars have the ability to
contrast the performance of stock markets in times of
political stability and unpredictability as well as in various
regulatory contexts.
 - SMRi,t = Stock Market Resilience (e.g., stock market index
returns or volatility) in country i at time t
 - PIi,t = Political Institutions (e.g., democracy index, political
stability, or corruption perceptions) in country i at time t
 - GDPi,t = Gross Domestic Product (GDP) growth rate in
country i at time t
 - INFi,t = Inflation rate in country i at time t
 - TRi,t = Trade openness (e.g., trade-to-GDP ratio) in country i
at time t
 - εi,t = Error term
 - β1 represents the impact of political institutions on stock
market resilience
 - β2, β3, and β4 control for the effects of GDP growth,
inflation, and trade openness, respectively
conclusion
 Economic Policy Uncertainty (EPU) affects stock prices
variably across countries
 Political institutions play a crucial role in investment and
growth
 - Balance between stability and flexibility is key- Islamic
Finance and Stock Markets operate on principles of Shariah
compliance
 - Urban resilience governance requires collective
management and prioritizing the vulnerable-
 Predicting financial distress in Pakistan requires examining
corporate governance, financial ratios, and macroeconomic
factors