Sivaprasad, S., Adami, R., Malki, I., Ibragimova, D. and Yodgorova, F. 2025. Spillover Effects of Geopolitical Risk on the Banking Sectors of Post-Soviet Countries. Review of Behavioral Finance.
| Title | Spillover Effects of Geopolitical Risk on the Banking Sectors of Post-Soviet Countries |
|---|---|
| Type | Journal article |
| Authors | Sivaprasad, S., Adami, R., Malki, I., Ibragimova, D. and Yodgorova, F. |
| Abstract | This study examines the spillover effects of geopolitical risks on the banking sectors of a sample of post-Soviet countries, focusing on the consequences of the Russian–Ukrainian conflict. We use the geopolitical risk (GPR) index from Caldara and Iacoviello (2022) as a global measure of geopolitical risk and the Diebold-Yilmaz (2012) connectedness model to estimate the spillover effects of the conflict on the performance of financial institutions. We also conduct a network analysis to further examine the transmission effects among banking sectors. Our results show little or no significant evidence of GPR transmissions on the financial sectors' performance (returns) and risk in the countries examined. One plausible explanation for the lack of risk transmission relates to the low exposure of the post-Soviet economies to external financing and investment flows, which reduces the effects of global geopolitical risks. High state ownership and tight government control further limit financial institutions’ exposure to external shocks. This study allows for a better understanding of GPR transmission mechanisms and the consequences of the conflict on Russia’s neighbouring countries. It can also support policymakers and financial institutions in formulating risk management strategies. |
| Keywords | Geopolitical risk |
| post-Soviet countries | |
| Banks | |
| Spillover | |
| Russian-Ukrainian conflict | |
| Journal | Review of Behavioral Finance |
| ISSN | 1940-5979 |
| 1940-5987 | |
| Year | 2025 |
| Publisher | Emerald Publishing Limited |
| Accepted author manuscript | File Access Level Open (open metadata and files) |
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Accepted author manuscript
Under embargo until 14 Sep 2025