Impact of world uncertainty on financial stability in emerging markets

Sajid Ali (), Raima Nazar and Muhammad Khalid Anser
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Sajid Ali: Bahauddin Zakariya University
Raima Nazar: The Women University
Muhammad Khalid Anser: Recep Tayyip Erdoğan University

SN Business & Economics, 2025, vol. 5, issue 12, 1-27

Abstract: Abstract The intricate link between world uncertainty and financial stability stems from the far-reaching impacts of heightened uncertainty driven by geopolitical, economic, and systemic factors. This complex interplay underscores the importance of understanding how uncertainty propagates in financial markets, ultimately influencing their resilience and well-being. The present investigation assesses the asymmetric impact of world uncertainty on financial stability in selected emerging nations (India, China, Russia, Brazil, Mexico, Turkey, Indonesia, South Africa, Thailand, and Malaysia). Previous investigations have used panel data to examine the relationship between global uncertainty and financial stability. Moreover, these studies commonly ignored the asymmetries in this relationship across several nations. Contrarily, this work uses the Quantile-on-Quantile tool to estimate this association for each nation individually. This technique delivers an in-depth, global perspective while providing a personalized, country-specific understanding. The results demonstrate that, within specific data quantiles, world uncertainty reduces financial stability across most of the selected nations. Moreover, the results exhibit various asymmetries between variables in the analyzed economies. These disclosures underscore the importance of financial policy in conscientiously measuring and competently guiding strategies across multiple levels of financial stability and global uncertainty.

Keywords: Quantile estimation; Financial stability; Financial policy; World uncertainty (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00974-w

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