Geopolitical risks and financial stress in emerging economies

Bibliographic Data

ID21543137
AuthorsTam NguyenHuu (0009-0002-9628-6797, Center for Methods Leuphana Universität Lüneburg Lüneburg Germany, corresponding author), Deniz Karaman Örsal (Faculty of Business, Economics and Social Sciences Hamburg Universität Hamburg Germany)
Year2024
Volume47
Issue1
Pages217-237
Publication date2024-01-01
Open AccessYes
TypeARTICLE
VenueWorld Economy (JOURNAL)
Journal identifiersISSN: 0378-5920 • E-ISSN: 1467-9701
PublisherWiley (PUBLISHER • GB)
DOI10.1111/twec.13529
OpenAlexW4387705369
LanguageEN
Citations received5
References cited41

We investigate the impacts of geopolitical risks (GPRs) on financial stress (FS) in major emerging economies from 1985 to 2019. Applying a recently developed panel quantile estimation method, we show that GPRs pose serious risks to the stability of the financial condition in emerging economies. Namely, when FS is already equal to or above average, GPRs intensify this instability to a remarkable degree. Nevertheless, GPRs do not ignite the stress when the financial situation is benign. In emerging economies, foreign exchange markets and, to a lesser extent, the banking industry and the debt market suffer more severe consequences of geopolitical tensions than the stock market. In contrast, advanced economies, represented by the Group of Seven (G7), have witnessed detrimental consequences of GPRs on their stock markets, but negligible effects on other parts of their financial systems

Economics · Economy · Emerging markets · Financial crisis · Financial market · Financial system · General Packet Radio Service · Geopolitics · Macroeconomics · Monetary economics · Stock market · Engineering · Financial Risk and Volatility Modeling · Global Financial Crisis and Policies · Market Dynamics and Volatility · Finance

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Open DOIOpen Access