Geopolitical risks and airlines stock return — Implications to the financial stability of European airlines

Yifei Cai, Xiaowen Fu and Yahua Zhang

Transport Policy, 2025, vol. 170, issue C, 51-57

Abstract: This study utilizes a time-varying Granger causality test to investigate the causal relationship between geopolitical risks and stock return of main carriers in Europe. While the overall estimations from the entire dataset reveal limited evidence supporting causality between these variables, the rolling-window bootstrapping Granger causality test presents a dynamic pattern that a time-varying causality running from geopolitical risks to airline stock returns. However, within this fluctuating analytical framework, airline stock returns fail to reliably predict geopolitical risks. Finally, we offer significant policy implications to the financial stability of European airlines.

Keywords: Airlines stock returns; US–China tensions; Time-varying granger causality test; Rolling-window technique (search for similar items in EconPapers)
JEL-codes: C22 G17 R41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.tranpol.2025.05.001

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