Political Uncertainty and Credit Risk
The Role of Event Markets in Forecasting Ukraine's Sovereign Spreads
Bibliographic Data
| ID | 21393023 |
|---|---|
| Authors | Mary J Becker (0000-0001-8452-5709, University of Akron), Mary Becker (Department of Finance, College of Business The University of Akron Akron Ohio USA), Zachary McGurk (0000-0002-8394-7800, Department of Economics and Finance, Wehle School of Business Canisius University Buffalo New York USA, corresponding author) |
| Year | 2026 |
| Volume | 73 |
| Issue | 3 |
| Publication date | 2026-07-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Scottish Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0036-9292 • E-ISSN: 1467-9485 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/sjpe.70062 |
| OpenAlex | W7152981758 |
| Language | EN |
| Citations received | 1 |
| References cited | 53 |
This paper examines whether prediction market data can forecast sovereign credit risk during periods of geopolitical conflict. Using prices from 152 political event contracts traded on Polymarket, we construct a market‐based measure of geopolitical uncertainty and aggregate information using a neural network. We evaluate its ability to predict daily changes in Ukrainian sovereign bond spreads from September 2024 to September 2025. Models incorporating the prediction market signal outperform standard benchmarks in out‐of‐sample tests, with forecast improvements of up to 4.6% for the 5‐year spread. These results indicate that prediction markets capture geopolitical risk not reflected in traditional financial variables
Bond · Bond market · Construct (python library) · Credit risk · Event (particle physics) · Event study · Financial market · Geopolitics · Sovereign credit · Credit Risk and Financial Regulations · Global Financial Crisis and Policies · Market Dynamics and Volatility
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| Unique citing works | 1 |
|---|---|
| Citations per year | 1 |
| Citation span | 2026 - 2026 (1) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 1 |