Geopolitical Risk and Banking Activity: An Asset–Liability Perspective

Carlos Giraldo, Iader Giraldo, Jose E. Gomez-Gonzalez and Jorge Uribe
Additional contact information
Carlos Giraldo: Fondo Latinoamericano de Reservas - FLAR
Jose E. Gomez-Gonzalez: Department of Finance, Information Systems, and Economics, City University of New York – Lehman College

Documentos de trabajo from FLAR

Abstract: This paper studies how geopolitical risk affects banking activity in emerging economies by examining both loan growth and deposit growth. Using a panel of 1,281 banks across 21 emerging countries between 2011 and 2021, we find that increases in geopolitical risk significantly reduce both lending and deposits. The results suggest that geopolitical shocks affect banks not only through higher uncertainty and weaker economic conditions, but also through disruptions in funding stability. In this sense, geopolitical risk appears to operate through a mechanism like the traditional bank lending channel, where weaker deposit growth constrains banks’ ability to extend credit. The findings also reveal important regional differences, with stronger effects in Sub-Saharan Africa, and show that the impact of geopolitical shocks persists over time. Overall, the paper highlights geopolitical risk as an increasingly important source of financial vulnerability in emerging banking systems.

Keywords: Geopolitical Risk; Bank Lending; Deposit Growth; Emerging Markets (search for similar items in EconPapers)
JEL-codes: F51 G21 G28 (search for similar items in EconPapers)
Pages: 32
Date: 2026-06-26
References: Add references at CitEc
Citations:

Downloads: (external link)
https://flar.com/wp-content/uploads/2026/06/Paper_ ... lity-Perspective.pdf

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:col:000566:023052

Access Statistics for this paper

More papers in Documentos de trabajo from FLAR
Bibliographic data for series maintained by Fondo Latino Americano de Reservas ().