 What drives abnormal returns of stock markets in wartime? Evidence from 17 invasionsVincent Hoffmann, Luu Duc Toan Huynh and Mei Wang European Journal of Political Economy, 2025, vol. 86, issue C Abstract: This study examines the impact of contemporary invasions on stock markets within advanced and emerging economies. By studying various conflicts and their progression into wars, we aim to expose underlying patterns in stock market reactions. First, we conduct an event study to assess the stock market reactions to seventeen modern invasions from 2001 to 2022. We calculate cumulative abnormal returns for the respective stock market and each invasion. Furthermore, we introduce a regression model highlighting differences in stock market reactions between advanced and emerging countries. The regression model contributes to understanding the relationship between cumulative abnormal returns and each country’s geographic and economic characteristics. Invasions generally have a negative impact on stock markets, with emerging markets showing greater sensitivity and more negative reactions to invasions than advanced stock markets. Furthermore, the findings suggest that underlying drivers play a role in explaining abnormal returns during invasions. Keywords: Geopolitical risks; Political tensions; Trade activities (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:86:y:2025:i:c:s0176268025000035 DOI: 10.1016/j.ejpoleco.2025.102643 Access Statistics for this article European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung More articles in European Journal of Political Economy from Elsevier |
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