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Assessing And Mitigating The Impact Of Geopolitical Risk Uncertainty On The Indian Financial Sector: A Policy Perspective

Author

Listed:
  • Satish Kumar

    (Indian Institute of Management Nagpur, India)

  • Amar Rao

    (Munjal University, Gurugram, India)

Abstract

The study explores the impact of geopolitical risk uncertainty on the Indian financial sector, focusing on bonds, banking, currency, and the equity markets. It uses a Quantile Vector AutoRegression (QVAR) approach to examine shock transmission under different market conditions. Results show that geopolitical risks significantly influence the Indian financial sector, with varying levels of shock transmission across different market conditions. The currency and banking sectors show heightened sensitivity during periods of increased uncertainty. The findings suggest the need for effective monitoring systems and comprehensive risk management strategies to mitigate the adverse effects of geopolitical risks.

Suggested Citation

  • Satish Kumar & Amar Rao, 2024. "Assessing And Mitigating The Impact Of Geopolitical Risk Uncertainty On The Indian Financial Sector: A Policy Perspective," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 27(3), pages 483-526, July.
    • Handle: RePEc:idn:journl:v:27:y:2024:i:3e:p:483-526
    DOI: https://doi.org/10.59091/2460-9196.2278
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    References listed on IDEAS

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    More about this item

    Keywords

    Geopolitical risk; Financial sector; India; Policy implications; Risk management; Shock transmission;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • G01 - Financial Economics - - General - - - Financial Crises
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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