Populism and Financial Markets: A Mixed Methods Analysis on Investors’ Reactions and Political Risk Assessment

The political phenomenon of populism has emerged as a significant force in recent decades, with a profound impact on the economic landscape. This book examines the implications of populism for financial markets, identifying it as a key political risk factor. As populist movements gain ground on a global scale, understanding their influence on financial behavior is essential, not only to navigate the complex investment environment of the present but also to anticipate future developments.

The central research question addressed in this book is to understand the impact of populism on investor expectations and political risk assessment in financial markets. The findings suggest that populism increases market uncertainty, raises the returns required by the investors, and thus increases the cost of equity for firms. Emphasizing the need to integrate populist risks into financial assessments, this book provides both theoretical insights and practical guidance for investors, financial managers, and policymakers. It highlights the importance of developing adaptive strategies to manage the evolving risks of populism in global financial markets.

Claudio Schütz held the position of research assistant and doctoral student at the Chair of Finance of Prof. Dr. Ulrich Pape at the ESCP Business School Berlin from September 2020 to May 2024. His research activities focused on the analysis of political risks and their impact on financial markets, expected returns and firm valuation.