Geopolitical tensions and banks’ stock market performance

Whelsy Boungou and Christian Urom

Economics Letters, 2025, vol. 247, issue C

Abstract: In this article, we explore the impact of geopolitical risks on bank stock returns in G20 countries over the period from January 3, 2011 to November 24, 2023. Using quantile regression, we observe that bank stock indices are exposed to geopolitical tensions. Our results highlight that geopolitical tensions negatively affect bank performance. Moreover, we find that this impact differs according to the level of stock performance, the period affected by geopolitical tensions (before and during the war in Ukraine and from the war in Israel onwards) and the location of banking systems. Overall, our results can help policymakers, bank managers and investors formulate adaptive policies to guard against the negative effects of geopolitical risk and maintain financial stability.

Keywords: Bank stock market index; Geopolitical risks; G20; Quantile regression (search for similar items in EconPapers)
JEL-codes: G11 G14 G15 G21 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176524005779

DOI: 10.1016/j.econlet.2024.112093

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