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Geopolitical tensions and banks’ stock market performance

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  • Boungou, Whelsy
  • Urom, Christian

Abstract

In this article, we explore the impact of geopolitical risks on bank stock returns in G20 countries over the period from January 3, 2011 to November 24, 2023. Using quantile regression, we observe that bank stock indices are exposed to geopolitical tensions. Our results highlight that geopolitical tensions negatively affect bank performance. Moreover, we find that this impact differs according to the level of stock performance, the period affected by geopolitical tensions (before and during the war in Ukraine and from the war in Israel onwards) and the location of banking systems. Overall, our results can help policymakers, bank managers and investors formulate adaptive policies to guard against the negative effects of geopolitical risk and maintain financial stability.

Suggested Citation

  • Boungou, Whelsy & Urom, Christian, 2025. "Geopolitical tensions and banks’ stock market performance," Economics Letters, Elsevier, vol. 247(C).
    • Handle: RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176524005779
    DOI: 10.1016/j.econlet.2024.112093
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    More about this item

    Keywords

    Bank stock market index; Geopolitical risks; G20; Quantile regression;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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