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The market impact of the involvement of the EU/ECB/IMF in crisis-affected countries during the European sovereign debt crisis

Dimitrios V. Kousenidis (Department of Economics, Aristotle University of Thessaloniki, Thessaloniki, Greece)

Review of Accounting and Finance

ISSN: 1475-7702

Article publication date: 8 May 2017




This paper aims to examine whether the release of news about policy interventions by the troika [European Union (EU)/the European Central Bank (ECB)/International Monetary Fund (IMF)] in the crisis-affected EU countries (Cyprus, Greece, Ireland, Italy, Portugal and Spain) and whether the policy responses of these countries’ governments had impacts on the return and risk of stocks in the financial and real-economy sectors of these countries.


The paper uses a broad set of news announcements concerning the troika authorities’ policy interventions and the policy responses of the affected Eurozone states’ governments. To test for the risk and return effects of these announcements during the crisis period, a set of regression equations is estimated under a difference-in-difference approach using intercept and slope dummy variables for news releases from troika authorities and from the national governments of the six EU countries. This enables unraveling the effects of the crisis (first difference) and the effects of news announcements (second difference).


The results indicate that the involvement of the troika managed to reverse some of the unfavourable market effects of the crisis. Moreover, the policy response of national governments was found to have stronger favourable effects in the markets of the affected countries implying that investors likely waited for the response of the national governments before they reacted to the policy actions of the troika. The simultaneous release of news from the troika and from national governments had adverse effects on the returns and risk of the firms in the real economy sectors, suggesting that cross-news announcements conveyed negative information in the markets.


The paper provides evidence on the effects of policy-related news announcements on the development of the recent sovereign debt crisis in Europe. This issue is highly important, as it can reveal the effectiveness of the IMF’s and EU authorities’ policy interventions in affected Eurozone member states during the first major crisis in Europe since the monetary union.



The author would like to thank the staff of the Department of Accounting and Finance at the University of Macedonia (Thessaloniki, Greece) for their academic input and administrative support during the author’s visiting professorship.


Kousenidis, D.V. (2017), "The market impact of the involvement of the EU/ECB/IMF in crisis-affected countries during the European sovereign debt crisis", Review of Accounting and Finance, Vol. 16 No. 2, pp. 162-178.



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