When geopolitical risks hit the supply chain: Impacts on credit default swap market

Yin-Siang Huang

Finance Research Letters, 2025, vol. 82, issue C

Abstract: This study examines the impact of cost-weighted geopolitical risk exposure in the supply chains of U.S. firms. Using a Difference-in-Differences (DiD) framework centered on the Russo-Ukrainian War, we find that treated firms experience a significant increase in credit default swap (CDS) spreads. In addition, these firms exhibit higher default probabilities and lower credit ratings, reflecting heightened financial vulnerability. These findings underscore the need for incorporating supply chain geopolitical risk metrics into credit risk assessments by policymakers and financial analysts, especially during periods of geopolitical uncertainty.

Keywords: Credit default swap spread; Geopolitical risk; Supply-chain; Uncertainty (search for similar items in EconPapers)
JEL-codes: F51 G12 G32 G33 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612325008815
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:82:y:2025:i:c:s1544612325008815

DOI: 10.1016/j.frl.2025.107622

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().