TY - JOUR
T1 - Geopolitical risk and bank stability
AU - Phan, Dinh Hoang Bach
AU - Tran, Vuong Thao
AU - Iyke, Bernard Njindan
N1 - Funding Information:
This research is funded by La Trobe University under the grant ASSC-2020-RSU20-PHAN.
Publisher Copyright:
© 2021 Elsevier Inc.
Copyright:
Copyright 2021 Elsevier B.V., All rights reserved.
PY - 2022/5
Y1 - 2022/5
N2 - In this paper, we present evidence supporting our hypothesis that geopolitical risk hurts bank stability. Using annual bank stability, bank-specific, macroeconomic, and geopolitical risk datasets, we show that an increase in geopolitical risk is associated with a decline in bank stability. This finding is robust to different geopolitical risk and bank stability measures, removing the period of extreme financial events, excluding banks with less than ten years of data, potential endogeneity issues, and controlling for other risk factors. Our results also emphasize the role of holding capital and bank size in attenuating the destabilizing effect of geopolitical risk.
AB - In this paper, we present evidence supporting our hypothesis that geopolitical risk hurts bank stability. Using annual bank stability, bank-specific, macroeconomic, and geopolitical risk datasets, we show that an increase in geopolitical risk is associated with a decline in bank stability. This finding is robust to different geopolitical risk and bank stability measures, removing the period of extreme financial events, excluding banks with less than ten years of data, potential endogeneity issues, and controlling for other risk factors. Our results also emphasize the role of holding capital and bank size in attenuating the destabilizing effect of geopolitical risk.
KW - Bank characteristics
KW - Bank stability
KW - Geopolitical risk
KW - Perceived geopolitical risk
KW - Realized geopolitical risk
UR - http://www.scopus.com/inward/record.url?scp=85115653744&partnerID=8YFLogxK
U2 - 10.1016/j.frl.2021.102453
DO - 10.1016/j.frl.2021.102453
M3 - Article
AN - SCOPUS:85115653744
VL - 46
JO - Finance Research Letters
JF - Finance Research Letters
SN - 1544-6123
IS - Part B
M1 - 102453
ER -