This dissertation investigates the intricate relationship between geopolitical risk and twocrucial aspects of external debt - external debt levels and debt service payments.. Thestudy's
Dependent Variables - s sex nh Hành Hà HH HH HH th pH rrrrkrrrkrrrkerrkee 22 3.2.3 CONCLO] Variables 1 ẻ
My main independent variables of interest are external debt level and external debt service payment The data of these variables are downloaded from World Bank.
This article utilizes the external debt to GDP ratio, as established in previous studies (Oatley, 2010; Ada et al., 2016; Waliu, 2018; Roy, 2023), to measure external debt levels The external debt, referred to as (extdbt), represents the total external debt expressed as a percentage of GDP, with data sourced from the updated World Development Indicators (Kose et al., 2017) According to the World Bank, total external debt encompasses debt owed to nonresidents, which can be repaid in currency, goods, or services, and includes public, publicly guaranteed, and private nonguaranteed long-term debt, as well as IMF credit and short-term debt The external debt stock-to-GDP ratio serves as a scaled indicator of a nation's debt position, offering insights into foreign economic involvement and reflecting historical reliance on foreign capital inflows, alongside the potential for future capital outflows (Kasidi, 2013).
The ratios of Debt Service/GDP serve as indicators of the proportion of national output, that are allocated towards servicing past debt Specifically, the Debt Service/GDP ratio
The measure assesses how effectively a country's current domestic output is used to meet debt service obligations from previous periods (Kasidi and Said, 2013) This study focuses on total debt service for external debt, expressed in current US dollars (TDS, current US$).
An increasing debt-to-income ratio signals a declining ability of debtors to fulfill their payment obligations, highlighting potential debt unsustainability This scenario can lead to significant adjustments needed to address unfavorable balance of payments conditions.
The study incorporates a lagged control variable in its model, recognizing the potential for a time-delayed relationship between the explanatory and response variables This approach implies that while the control variable may exert a causal influence on the dependent variable, the effects of this influence may not be immediately evident, manifesting instead in observable changes to the response variable over time.
This study builds upon previous research by examining key economic indicators such as GDP growth, broad money supply, domestic investment, GDP per capita, inflation rates, and trade openness The data for these variables has been sourced from the World Bank, ensuring a reliable foundation for analysis.
This study follow the study of Lu et al (2020) and Guo and Stepanyan (2011) by using money supply to capture the “price effect”, are expected to positively associated with credit.
An expansionary monetary stance, characterized by an increase in the money supply, is expected to enhance the demand for credit, thereby influencing the demand for external debt (Guo and Stepanyan, 2011; Moore, B., 1993) Effective monetary policy can aid developing nations in diminishing their dependence on foreign currency debt, particularly that which is owned by foreign investors (Ogrokhina, O., & Rodriguez, C., 2018) Consequently, I account for the impact of broad money in this analysis.
This study builds upon the research of Bohn (1990), Colombo and Longoni (2009), and Panizza (2008), highlighting that issuing foreign currency debt offers distinct advantages over domestic currency debt Specifically, it can mitigate time-consistency issues and address unexpected fluctuations in both domestic and foreign markets.
Inflation rates exhibit a negative correlation with domestic output, as noted by Bohn (1990) To assess this relationship accurately, domestic investment is evaluated through the ratio of gross fixed capital formation to GDP Consequently, it is essential to account for the influence of domestic investment in this analysis.
This study builds on the research of Elekdag and Han (2015) and Lu et al (2020) by analyzing the yearly growth rate of GDP to explore the relationship between real GDP growth and various types of debt—public, foreign, and private—across 28 EU countries over the last decade The findings reveal a bidirectional causality between public debt and economic growth, along with clear evidence indicating that economic growth leads to a reduction in foreign debt.
This study builds upon the research of Lu et al (2020) by analyzing the log of GDP per capita in constant US dollars A higher GDP per capita serves as an effective indicator of a country's capacity to offer collateral to foreign lenders, while also being directly linked to the potential penalties lenders may impose in the event of a default Consequently, this analysis accounts for the influence of GDP per capita.
In line with previous research by Lu et al (2020) and Bohn (1990), this study controls for trade openness and examines the advantages of foreign currency debt over domestic currency debt It is found that foreign currency debt is preferable when the output growth rates of both countries are closely linked and domestic inflation remains uncertain Consequently, the analysis includes a control for inflation's impact.
In this study, I build on previous research by controlling for trade openness, defined as the ratio of total imports and exports to GDP (Lu et al., 2020) Trade openness is widely recognized as a key factor correlated with economic growth However, in our analysis, we consider additional factors that may influence the relationship between trade and external debt Notably, more open economies tend to face higher costs when repudiating their external debt obligations, primarily due to their reliance on international trade.
Lenders impose 24 sanctions primarily due to disruptions in trade flows that typically occur following a default A robust level of trade ensures the availability of foreign currency, which is essential for repaying external debt Consequently, trade openness not only enhances a country's growth prospects but also positions traded goods as a form of collateral, thereby improving the nation's creditworthiness.
Variable Abbreviation Measurement Data Source
External debt | EXTDBT The ratio of external debt stocks to GDP World Developmet
External debt | EXTDBTPMT The ratio of debt servie (on external debt) | World Developmet service to GDP Indicators payment
Geopolitical GPR Geopolitical risk index for country i at Caldara and risk period j lacoviello (2022)
Broad money | BROADMONEY The ratio of broad money to GDP World Developmet
Domestic DOM_INVESTME | The ratio of gross fixed capital formation to | World Developmet investment NT GDP Indicators
GDP growth GDP GROWTH Yearly growth rate of GDP World Developmet
GDP per GDPC The natural logarithm of GDP per capita World Developmet capita Indicators
Inflation INFLATION Yearly growth rate of inflation rate, World Developmet consumer prices Indicators
Trade OPENESS Sum of total imports and exports to GDP World Developmet openness Indicators
Model specification ceecsssssecsecsssecssssecssssessesstesseessssseestesseeseessesseeasessseneeseeseesteseeseesseeseeateeneeateeess 26
This study builds upon existing literature that explores the effects of geopolitical risk on financial investment (Lu et al., 2022) and the relationship between political risk and external debt (Oatley, 2010) Utilizing a panel regression model, the author assesses how geopolitical risk influences the external debt of various countries.
Panel regression model is performed in Stata through the following three steps following:
The study initially assesses and excludes instances where there is a negligible correlation between control variables and the dependent variable, as well as cases where control variables exhibit multicollinearity, determined by the Variance Inflation Factor (VIF).
The Hausman test is a crucial statistical tool employed in panel data analysis to decide between fixed-effects and random-effects models This test evaluates the validity of the assumption that individual-specific effects are uncorrelated in the random-effects model A statistically significant difference in the estimated coefficients between the two models indicates a violation of this assumption, guiding researchers in selecting the appropriate modeling approach.
The study performs an autocorrelation test within a fixed-effect model to assess the validity of the assumption that residuals are free from serial correlation Detecting autocorrelation in the residuals could indicate potential issues with the model's reliability.
26 residuals, it indicates that the model does not adequately capture the time-dependent structure of the data, potentially leading to biased and inefficient parameter estimates.
The study employs panel regression analysis, informed by regression and autocorrelation tests, to investigate the impact of geopolitical risk on external debt and external debt payments, while controlling for macroeconomic variables.
To address omitted variable bias in nonexperimental research, fixed-effects models are tailored for panel data, as noted by Allison (2009), Fox (2016), Treiman (2009), and Wooldridge (2010) Traditional statistical methods that analyze differences between groups, like men and women, can lead to heterogeneity and potential omitted variable bias In contrast, fixed-effects models focus on variations within individual units, effectively reducing these issues.
To address the influence of time effects, this study employs a two-way fixed effects model (TW-FE) The TW-FE model effectively tackles the issue of omitted variables that vary across individuals but remain constant over time, as well as those that change over time but are consistent across individuals The specification of the model used in this paper is outlined as follows:
EXTDBT,, = œ + BGPR¡¿ + yControls;¢_1 + @¡ + Te + Ext
EXTDBTPMT,, = œ + BGPRi, + yControls;¢_1 + @¡ + Te + Eit
EXTDBT (External Debt) is the dependent variable, capturing the country’s external debt level;
EXTDBTPMT (External Debt Interest Payment) is the dependent variable, capturing the country’s debt service payment on external debt
GPR is the independent variable, reprensenting the country geopolitical risk index in one year
Control variables are the lagged t-1 of GDP growth (GDP GROWTH), Broad money, Domestic investment (DOM_INVEST), natural logarithm of GDP per capita (GDPC), Inflation, Trade openess (OPENESS).
Last but not least, ¡ denotes country; t denotes year.
RESULTS AND DISCUSSION - 5c gà 29 4.1 D@SCTIPtiVe ri số
Fixed effect estimatẽOTIS cô r1 HH HH HH HH1 H11 111gr 34 LÀN nh
To identify the appropriate model for the study, two Hausman tests are conducted If the probability value of the estimated parameter is below 5%, the null hypothesis is rejected, indicating that the random effects model is not suitable As a result, the alternative hypothesis is accepted, confirming that the fixed effects model is the appropriate choice.
An analysis of Tables 4.5 and 4.6 reveals that the estimated Hausman tests fall below the 5% critical threshold Consequently, the fixed effects estimator is deemed more suitable than the random effects model.
(b) (B) (b-B) sqrt(diag(V_b fe re Difference Std err.
152987 OPENESS 1776575 -0.02467 0.0335 b = Consistent under H0 and Ha; obtained from xtreg.
B = Inconsistent under Ha, efficient under HO; obtained from xtreg.
Test of HO: Difference in coefficients not systematic chi2(7) = (b-B)'[(V_b-V_B)*(-1)](b- B)
(b) (B) (b-B) sqrt(diag(V_b fel rel Difference Std err.
0269264 OPENESS 0374646 -0.01054 0.004817 b = Consistent under H0 and Ha; obtained from xtreg.
B = Inconsistent under Ha, efficient under HO; obtained from xtreg.
Test of HO: Difference in coefficients not systematic chi2(6) = (b-B)'[(V_b-V_B)*(-1)](b- B)
To see if time fixed effects are needed when running a FE model use the command testparm.
The joint F-test indicates that the coefficients for all years are not jointly equal to zero, as evidenced by a Prob > F value of less than 0.05 This result suggests that time fixed effects are necessary, as illustrated in Table 4.7.
The analysis presented in Table 4.8 utilizes two-way fixed effects models to account for potential time-varying factors specific to countries and years that may influence the results Model I examines the correlation between geopolitical risk and the level of external debt, whereas Model II explores the relationship between geopolitical risk and external debt payments.
Table 4.8 Two-way Fixed effects regression results
External debt External debt payment b p b p GPR 0.1852” 0.0431 0.0499” 0.0001
The statistical analysis in the document reveals a significant relationship between geopolitical risk (gpr) and both external debt and external debt payment The findings indicate that fluctuations in geopolitical risk can impact a country's external financial obligations, highlighting the importance of monitoring geopolitical factors in economic assessments.
Model (I) reveals a statistically significant positive relationship between "gpr" and "external debt," with a coefficient of 0.1852 at the 5% significance level, resulting in the rejection of hypothesis H1.
The model's constant term is 1.5531, which is statistically significant at the 1% level Additionally, the R² value is 0.2543, indicating that around 25.43% of the variability in "external debt" can be attributed to the independent variable "gpr" along with other control variables in the model.
This finding aligns with several previous studies on developing countries (Osinubi et al., 2010; Alogoskoufis & Christodoulakis, 1991; Chelikani et al., 2023) but contradicts others that adhere to real-option theory (Dixit, 1992; Dixit & Pindyck, 1994; Kogut & Kulatilaka, 1994; Myers, 1977; Tang & Tikoo, 1999).
Indeed, to explain this, Carrière-Swallow and Céspedes (2013) show that there exists a large heterogeneity in countries’ reactions to sudden jumps in uncertainty.
Geopolitical events, such as conflicts and trade wars, significantly disrupt national economies by lowering export revenues, restricting market access, and decreasing foreign direct investment, ultimately leading to reduced tax revenues and budget deficits (Adedoyin et al., 2020; Liadze et al., 2022; Bussy and Zhang, 2023) To address these deficits, governments often resort to external borrowing due to limitations in domestic funding and private investment (Osinubi, 2010; Alogoskoufis and Christodoulakis, 1991) Additionally, currency depreciation can worsen the burden of external debt, making repayments more costly and prompting further borrowing, particularly when export revenues decline (Neufeld and Neufeld, 2022) For instance, Ukraine's conflict with Russia has resulted in an estimated $280 billion economic loss from 2014 to 2020, forcing the country to heavily rely on external borrowing to stabilize its economy Similarly, countries like Argentina, Peru, and Turkey have faced economic challenges due to large budget deficits and overvalued exchange rates, pushing them to depend on foreign capital (World Bank, 1985) In contrast, Malaysia and other East Asian nations have successfully avoided significant fiscal deficits and price distortions, maintaining a more stable economic position.
Geopolitical events can significantly impact political stability, leading to conflicts and economic sanctions that diminish investor confidence This decline often results in capital flight, where investors withdraw their funds, posing a challenge for countries to stabilize their economies and regain the trust of both domestic and private investors.
39 confidence, which may necessitate increased external borrowing to meet their debt obligations.
Countries reliant on external debt often struggle to generate domestic revenues or attract private investment, as highlighted by the World Bank (2021) The economic outlook for these nations has worsened, particularly when geopolitical events like wars hinder their ability to mobilize domestic funds As a result, external debt becomes a crucial option for financing budget deficits and fostering economic growth The World Bank's International Debt Report (2022) reveals that despite some improvements in debt indicators in 2021, the debt-to-GNI ratio for IDA countries remained above pre-pandemic levels at 25%, underscoring ongoing challenges in managing external debt.
In the study's regression analysis, control variables such as rising money supply and increased trade openness significantly impact external debt outcomes The "broadmoney" variable shows a coefficient of 0.1650 for external debt, with statistical significance at the 1% level, while "openness" has a coefficient of 0.2184, also statistically significant at the 1% level However, variables like "gdp_growth" and "dom_investment" do not demonstrate statistical significance at conventional levels (p > 0.1) These findings align with the research conducted by Guo and Stepanyan (2011).
Loose monetary conditions, both domestic and global, lead to increased credit availability (Guo and Stepanyan, 2011) Additionally, greater trade openness positively influences external debt in both the short and long term (Kizilgửl and Ipek, 2014) Interestingly, the negative correlation between GDP per capita and external debt suggests that economic growth can result in higher revenues and fiscal surpluses, which can be utilized to pay down existing external debt, thereby alleviating the overall debt burden even as GDP continues to rise (Turan and Yanikkaya, 2020).
In Model (II), the coefficient for "gpr" is 0.0499, suggesting a significant positive relationship with external debt payment, validated at the 1% significance level, thereby supporting hypothesis H2 Additionally, the intercept term stands at 0.0414.
The model demonstrates a statistically significant relationship at the 1% level, with an R² value of 0.2229 This indicates that roughly 22.29% of the variability in "external debt payment" can be attributed to the independent variable "gpr" along with other control variables.
Baseline T€SUèfS -ô x++xerktkHH HH HH H11 HH HH HH HH1 1111111111111 rkg 37
This research paper examines the influence of geopolitical risk on external debt levels and service payments in 17 developing countries from 1985 to 2021, considering factors such as GDP growth, broad money, domestic investment, GDP per capita, inflation, and trade openness The findings provide valuable insights into the intricate relationships between international finance and political dynamics.
Research indicates that geopolitical risk significantly influences external debt levels, with countries experiencing heightened geopolitical instability likely to incur more external debt This correlation arises from the economic and political turmoil prevalent in such nations, which fosters an environment where increased borrowing becomes necessary to address budget deficits and stabilize economies Furthermore, the findings demonstrate that geopolitical risk also positively affects external debt service payments, driven by higher risk premiums demanded by investors, rising interest rates, and the depreciation of local currencies, all contributing to the increased costs associated with servicing external debt.
The analysis indicates that a rising money supply and increased openness to international trade are linked to higher external debt levels, while greater domestic investment correlates with lower external debt These insights highlight the need to consider multiple economic factors when assessing a nation's external debt dynamics.
Research underscores how geopolitical events contribute to political instability, which in turn increases external debt Crises can erode investor confidence, prompt capital flight, and compel nations to seek external borrowing for economic stabilization The study highlights the intricate relationship between political and economic dynamics in influencing a country's external debt path.
CONCLUSION AND RECOMMENDATTION - Si 43 5.1 CONCIUSION n7
RecommendatẽOIS - - set th nh HH Hàn Hà Hà Hà Hà KH HH HH Hi nrikt 44 5.3 Further implications 1
The study highlights the critical need for policymakers and international financial institutions to enhance economic stability and resilience against geopolitical shocks This requires effective fiscal management to lower budget deficits, boost domestic investment, and increase competitiveness, while also diversifying revenue sources and minimizing external borrowing Governments must implement comprehensive risk management frameworks that assess geopolitical risks within their debt strategies, closely monitoring developments and preparing contingency plans Strengthening institutional capacities for risk assessment and crisis response is essential, and international financial institutions should offer tailored support, such as concessional loans or debt relief, to countries facing geopolitical challenges Additionally, fostering diplomatic efforts to alleviate tensions can significantly reduce risks and create a more stable environment for developing nations, ultimately decreasing the reliance on emergency external borrowing.
This dissertation sheds light on the influence of geopolitical risk on external debt, yet it is essential to recognize its limitations for a deeper understanding of this intricate issue A significant constraint is the limited availability of data on external debt, which restricts the analysis's depth and may not fully reflect the complexities of external debt dynamics in the chosen developing countries Consequently, this limitation could lead to an incomplete understanding of the relationship between geopolitical risk and external debt Future research should aim to access more comprehensive and detailed external debt data to strengthen the analysis's robustness.
The dissertation examines the connection between geopolitical risk and external debt, focusing on debt and interest levels Future research should investigate the intricacies of external debt, including factors like debt maturity, the distinction between public and private debt, and the industries most vulnerable to geopolitical risks This detailed analysis would enhance the understanding of how various external debt types respond to geopolitical events, allowing policymakers and stakeholders to craft more effective strategies.
Ada, M.S., Chigozie, A.O and Godwin, U (2016) Impact of External Debt on Economic Growth in Nigeria‘ An ARDL Bound Testing Approach Journal of Economics and Sustainable Development, 7(10), 16-26.
Adams, S., Adedoyin, F., Olaniran, E and Bekun, F.V (2020) Energy consumption, economic policy uncertainty and carbon emissions; causality evidence from resource rich economies. Economic Analysis and Policy, 68, pp.179-190.
Adra, S., Gao, Y., Huang, J and Yuan, J (2023) Geopolitical risk and corporate payout policy. International Review of Financial Analysis, 87, p.102613.
Aiyar, S., Chen, J., Ebeke, C.H., Garcia-Saltos, R., Gudmundsson, T., Ilyina, A., Kangur, A., Kunaratskul, T., Rodriguez, S.L., Ruta, M., Schulze, T., Soderberg, G and Trevino, J.P (2023). Geo-Economic Fragmentation and the Future of Multilateralism Staff Discussion Notes, [online] 2023(001).
Ajayi, S.I (2000) Macroeconomic Approach to External Debt: The Case of Nigeria In: S.I Ajayi and M.S Khan, eds., External Debt and Capital Flight in Sub-Saharan Africa [online] Washington, D.C.: International Monetary Fund.
Akram, Q.F (2020) Oil price drivers, geopolitical uncertainty and oil exporters’ currencies. Energy Economics, 89, p.104801.
Allison, P.D (2009) Fixed effects regression models Thousand Oaks: Sage Publications, Inc.
Alogoskoufis, G and Christodoulakis, N (1991) Fiscal deficits, seigniorage and external debt: the case of Greece External Constraints on Macroeconomic Policy: The European Experience, Cambridge et al, pp.264-301.
Alvarez-Plata, P and Brtick, T (2008) External Debt in Post-Conflict Countries World Development, 36(3), pp.485-504.
Baker, S.R., Bloom, N and Davis, S.J (2016) Measuring Economic Policy Uncertainty The Quarterly Journal of Economics, 131(4), pp.1593-1636.
Bank, W (1985) World development report 1985, International capital and economic development New York: Oxford University Press.
Baur, D.G and Smales, L.A (2020) Hedging geopolitical risk with precious metals Journal of Banking & Finance, 117, p.105823.
Bernanke, B.S (1983) Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression The American Economic Review, 73(3), pp.257-276.
Bohn, H (1990) A positive theory of foreign currency debt Journal of International Economics, 29(3-4), pp.273-292.
Bussy, A and Zheng, H (2023) Responses of FDI to geopolitical risks: The role of governance, information, and technology International Business Review, 32(4), p.102136.
Caldara, D and Iacoviello, M (2022) Measuring Geopolitical Risk American Economic Review, 112(4), pp.1194-1225.
Geopolitical tensions and fragmentation are increasingly recognized as significant threats to global financial stability, according to a recent IMF article by Catalan et al (2023) The analysis highlights how these factors can disrupt economic systems and lead to instability in financial markets, necessitating urgent attention from policymakers and stakeholders The implications of these threats extend beyond immediate financial concerns, affecting broader economic growth and international cooperation.
Chelikani, S., Nam, K and Wang, X.W (2022) Revisiting the ICAPM under the distortion of risk-return tradeoff in short-horizon stock returns Review of Financial Economics, 41(2), pp.109-135.
Cheng, C.H.J and Chiu, C.-W (Jeremy) (2018) How important are global geopolitical risks to emerging countries? International Economics, 156, pp.305-325.
Choi, S and Furceri, D (2019) Uncertainty and cross-border banking flows Journal of International Money and Finance, 93(C), pp.260-274.
Chortane, S.G and Pandey, D.K (2022) Does the Russia-Ukraine war lead to currency asymmetries? A US dollar tale The Journal of Economic Asymmetries, 26.
Clance, M.W., Gupta, R and Wohar, M.E (2018) Geopolitical risks and recessions in a panel
47 of advanced economies: evidence from over a century of data Applied Economics Letters, 26(16), pp.1317-1321.
Colombo, E and Longoni, E (2009) The Politics of External Debt in Developing Countries. Working Paper Department of Political Economy, University of Milan Bicocca, 178.
Dai, Y., Rau, P.R., Stouraitis, A and Tan, W (2020) An ill wind? Terrorist attacks and CEO compensation Journal of Financial Economics, 135(2), pp.379-398.
Dakhlaoui, I and Aloui, C (2016) The interactive relationship between the US economic policy uncertainty and BRIC stock markets International Economics, 146(C), pp.141-157.
Dapontas, D and Giordano, C., 2011 Currency crises: the case of Hungary (2008-2009) using two stage least squares Bank of Greece.
De Wet, M.C (2023) Geopolitical Risks and Yield Dynamics in the Australian Sovereign Bond Market Journal of Risk and Financial Management, 16(3), p.144.
Dijkink, G (2009) Geopolitics and Religion In: R Kitchin and N Thrift, eds., International Encyclopedia of Human Geography, pp.453-457.
Dixit, A (1992) Investment and Hysteresis Journal of Economic Perspectives, 6(1), pp.107-
Dixit, A.K and Pindyck, R.S (1994) Investment Under Uncertainty Princeton (New Jersey): Princeton University Press.
Elekdag, S and Han, F (2015) What drives credit growth in emerging Asia? Journal of Asian Economics, 38, pp.1-13.
Epstein, L.G and Schneider, M (2008) Ambiguity, Information Quality, and Asset Pricing The Journal of Finance, 63(1), pp.197-228.
Feng, C., Han, L., Vigne, S and Xu, Y (2023) Geopolitical risk and the dynamics of international capital flows Journal of International Financial Markets, Institutions and Money,
Fox, J (2016) Applied Regression Analysis and Generalized Linear Models Los Angeles: SAGE Publications.
Gao, G.Y., Wang, D.T and Che, Y (2018) Impact of historical conflict on FDI location and performance: Japanese investment in China Journal of International Business Studies, 49(8), pp.1060-1080.
Gertler, M and Rogoff, K (1990) North-South lending and endogenous domestic capital market inefficiencies Journal of Monetary Economics, 26(2), pp.245-266.
Harris, L (1986) South Africa’s External Debt Crisis Third World Quarterly, 8(3), pp.793- 817.
Hofstede, G (2001) Culture’s consequences: Comparing values, Behaviors, Institutions, and Organizations across Nations 2nd ed Thousand Oaks, California: Sage.
Hoque, M.E and Zaidi, M.A.S (2018) The impacts of global economic policy uncertainty on stock market returns in regime switching environment: Evidence from sectoral perspectives. International Journal of Finance & Economics, 24(2), pp.991-1016.
Hossain, J (2021) What is geopolitical risk? | Investing Definitions | Morningstar [online]
Morningstar, Inc Available at: https://www.morningstar.com/investing- definitions/geopolitical-risk [Accessed 7 Oct 2023].
Huang, T., Wu, F., Yu, J and Zhang, B (2015) International political risk and government bond pricing Journal of Banking & Finance, 55, pp.393-405.
IMF (2023) Chapter 3: Fragmentation and Commodity Markets: Vulnerabilities and Risks.
[online] IMF, pp.81-101 Available at: https://www.imf.org/-
/media/Files/Publications/WEO/2023/October/English/ch3.ashx [Accessed 7 Oct 2023].
Jia, S., Yang, L and Zhou, F (2022) Geopolitical risk and corporate innovation: Evidence from China Journal of Multinational Financial Management, 66, p.100772.
Kasidi, F and Said, A (2013) Impact of External Debt on Economic Growth: A Case Study of Tanzania Advances in Management & Applied Economics, 3(4), pp.59-82.
Kastner, S.L (2007) When Do Conflicting Political Relations Affect International Trade?
Journal of Conflict Resolution, 51(4), pp.664-688.
Khan, K., Khurshid, A and Cifuentes-Faura, J (2023) 'Investigating the relationship between geopolitical risks and economic security: Empirical evidence from central and Eastern
Kizilgộl, ệ.A and ẽpek, E (2014) An Empirical Evaluation of the Relationship between Trade
Openness and External Debt: Turkish Case International Econometric Review, 6(1), pp.42- 58.
Kogut, B and Kulatilaka, N (1994) Options Thinking and Platform Investments: Investing in Opportunity California Management Review, 36(2), pp.52-71.
Kose, M.A., Kurlat, S., Ohnsorge, F and Sugawara, N (2022) A cross-country database of fiscal space Journal of International Money and Finance, 128, p.102682.
Lane, P.R (2004) Empirical Perspectives on Long-Term External Debt Topics in Macroeconomics, 4(1).
Laeven, L and Tong, H (2012) 'US monetary shocks and global stock prices,’ Journal of
Financial Intermediation, 21(3), pp 530-547 https://doi.org/10.1016 /j.jfi.2012.02.002.
In the context of the ongoing Russia-Ukraine crisis, investors must carefully consider the implications for emerging markets debt The geopolitical tensions have led to increased volatility and uncertainty in these markets, necessitating a strategic approach to investment Evaluating the risk factors and potential opportunities within emerging markets is crucial for navigating this complex landscape As the situation evolves, maintaining a diversified portfolio and staying informed about regional developments will be essential for managing exposure to emerging markets debt effectively.
Le, A.-T and Tran, T.P (2021) Does geopolitical risk matter for corporate investment? Evidence from emerging countries in Asia Journal of Multinational Financial Management,
Li, Q (2008) Foreign Direct Investment and Interstate Military Conflict Journal of International Affairs, 62(1), pp.53-66.
Li, Q and Vashchilko, T (2010) Dyadic military conflict, security alliances, and bilateral FDI flows Journal of International Business Studies, 41(5), pp.765-782.
Liadze, I., Macchiarelli, C., Mortimer-Lee, P and Sanchez Juanino, P (2022) The Economic Costs of the Russia-Ukraine War The World Economy, 46(4), pp.874-886.
Lin, D., Foster, D.P., Ungar, L H., (2012) VIF Regression: A Fast Regression Algorithm for Large Data Journal of the American Statistical Association, 106.
Lu, Z., Gozgor, G., Huang, M and Keung Lau, M.C (2020) The Impact of Geopolitical Risks on Financial Development: Evidence from Emerging Markets Journal of Competitiveness, 12(1), pp.93-107.
Markowitz, H (1952) Portfolio Selection The Journal of Finance, 7(1), pp.77-91.
Missio, S and Watzka, S (2011) Financial Contagion and the European Debt Crisis CESifo Working Paper No 3554.
Moore, B., 1993 Financial constraints to the growth and development of small high- technology firms Department of Applied Economics, Small Business Research Centre, University of Cambridge.
Myers, S.C (1977) Determinants of corporate borrowing Journal of Financial Economics, 5(2), pp.147-175.
Myers, S.C (1984) Finance Theory and Financial Strategy Interfaces, 14(1), pp.126-137.
Neufeld, K and Neufeld, K (2022) "The New Voice of Ukraine - Conflict with Russia has cost
Since 2014, the ongoing conflict with Russia has resulted in a staggering economic loss of $280 billion for Ukraine, according to the Centre for Economics and Business Research (CEBR) This significant financial impact highlights the severe challenges faced by the Ukrainian economy amid geopolitical tensions The CEBR report emphasizes the urgent need for economic recovery and support for Ukraine as it navigates the repercussions of the prolonged conflict.
Nguyen, T.C and Thuy, T.H (2023) Geopolitical risk and the cost of bank loans Finance Research Letters, 54, pp.103812-103812.
Niu, Z., Wang, C and Zhang, H (2023) Forecasting stock market volatility with various geopolitical risks categories: New evidence from machine learning models International Review of Financial Analysis, 89, p.102738.
Oatley, T (2010) Political Institutions and Foreign Debt in the Developing World. International Studies Quarterly, 54(1), pp.175-195.
Obstfeld, M and Rogoff, K.S (1996) Foundations of international macroeconomics London: Mit Press.
Ogrokhina, O and Rodriguez, C.M (2018) The role of inflation targeting in international debt denomination in developing countries Journal of International Economics, 114(C), pp.116-
Osinubi, T.S., Dauda, R.O.S and Olaleru, O.E (2010) Budget deficits, external debt and economic growth in Nigeria The Singapore Economic Review, 55(03), pp.491-521.
Overland, I (2019) The geopolitics of renewable energy: Debunking four emerging myths. Energy Research & Social Science, 49, pp.36-40.
Oxford Analytica (2022), "Mexico capital outflows point to investor uncertainty", Expert
Panizza, U., 2008 Domestic and External Public Debt in Developing Countries Development
Panizza, U., Sturzenegger, F and Zettelmeyer, J (2009) The Economics and Law of Sovereign Debt and Default Journal of Economic Literature, 47(3), pp.651-698.
Pastor, L and Veronesi, P (2013) Political uncertainty and risk premia Journal of Financial Economics, 110(3), pp.520-545.
Portes, R and Rey, H (2005) The determinants of cross-border equity flows Journal of International Economics, 65(2), pp.269-296.
Qiao, X., Zhu, H., Zhang, Z and Mao, W (2022) Time-frequency transmission mechanism of EPU, investor sentiment and financial assets: A multiscale TVP-VAR connectedness analysis.
The North American Journal of Economics and Finance, [online] 63, p.101843.
Reinhart, C., Rogoff, K and Savastano, M.A (2003) Debt Intolerance Brookings Papers on Economic Activity, 34(1), pp.1-74.
Rodrik, D and Velasco, A (1999) Short-Term Capital Flows NBER Working Paper 7364.
Roy, A (2023) ‘Nexus between economic growth, external debt, oil price, and remittances in India: New insight from novel DARDL simulations’ Resources Policy, 83, p 103742.
Saiz, A and Simonsohn, U (2013) Proxying For Unobservable Variables With Internet Document-Frequency Journal of the European Economic Association, 11(1), pp.137-165.
Stepanyan, V and Guo, K (2011) Determinants of Bank Credit in Emerging Market Economies IMF Working Papers, 11(51).
Tang, C.Y and Tikoo, S (1999) Operational Flexibility and Market Valuation of Earnings. Strategic Management Journal, 20(8), pp.749-761.
Treiman, D.J (2009) Quantitative Data Analysis: Doing Social Research to Test Ideas San Francisco: Jossey-Bass.
Triantis, A.J (2000) Real Options And Corporate Risk Management Journal of Applied Corporate Finance, 13(2), pp.64-73.
Triki, M.B and Maatoug, A.B (2020) The GOLD market as a safe haven against the stock market uncertainty: Evidence from geopolitical risk Resources Policy, 70, p.101872.
Turan, T and Yanikkaya, H (2020) External debt, growth and investment for developing countries: some evidence for the debt overhang hypothesis Portuguese Economic Journal, 20, pp.319-341.
Wang, C.S.H., Hsiao, C and Yang, H.-H (2021) Market integration, systemic risk and diagnostic tests in large mixed panels Econometric Reviews, 40(8), pp.750-795.
Waliu, O.T (2018) Exploring causal relationship between public debt and economic growth in a recessionary economy: The nigerian case International Journal of Research in Social
Wooldridge, J.M (2010) Econometric Analysis of Cross Section and Panel Data Cambridge: Mit Press.
World Bank (2022) International Debt Report 2022 [online] The World Bank Available at: https://openknowledge.worldbank.org/handle/10986/38045 [Accessed 7 Oct 2023].
World Economic outlook, — April 2023: A rocky recovery (2023). https://www.imf.org/en/Publications/WEO/Issues/2023/04/11/world-economic- outlook-april-2023?cid=bl-com-spring2023flagships-WEOEA2023001.
World Economic Outlook, October 2023 (2023). https://www.imf.org/en/Publications/WEO.
Wright, J (2015) International Encyclopedia of the Social & Behavioural Sciences 2nd ed. Amsterdam: Elsevier.
Yu, M and Wang, N (2023) The Influence of Geopolitical Risk on International Direct Investment and Its Countermeasures Sustainability, 15(3), p.2522.
Zhang, Y., He, J., He, M and Li, S (2023) Geopolitical risk and stock market volatility: A global perspective Finance Research Letters, 53, p.103620.