Proximity to War: The stock market response to the Russian invasion of Ukraine

Müller, Gernot, Jonathan Federle, Andre Meier and Victor Sehn
Authors registered in the RePEc Author Service: Gernot J. Müller

No 17185, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The outbreak of a war exposes countries and firms in its proximity to the risk of military escalation. Disaster risk goes up and stock markets decline accordingly. In support of this hypothesis, we identify a "proximity penalty" in the stock market response to the Russian invasion of Ukraine. The closer countries and---even within countries---firms are located to Ukraine, the more negative their equity returns in a four-week window around the start of the war. Controlling for trade-related spillovers, 1,000 kilometers of extra distance equate to 1.1 percentage points in equity returns.

Keywords: Rare disasters; Proximity penalty; War; Military spillovers; International conflicts; Russia; Ukraine; Trade; Neighbors (search for similar items in EconPapers)
JEL-codes: F50 F51 G15 (search for similar items in EconPapers)
Date: 2022-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP17185 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

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:cpr:ceprdp:17185

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP17185

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().