"Impact of Geopolitical Risks on Global Financial Markets"
Dr. Batani Raghavendra Rao*, Kavya**, Krutika Soni**, Vaidehi Gokhale V **, Seema Choudhary K**, Aradhya J Kottary**, Kushi G D**, Abhisekh Chauhan**, Nihal J Rajani**.
*Professor, Faculty of Management Studies, Jain (Deemed-to-be University), Bangalore.
**MBA, 2023-25, Faculty of Management Studies, Jain (Deemed-to-be University), Bangalore.
Abstract
Geopolitical risks have become one of the major determinants that affect financial markets and economic stability in an increasingly interdependent world economy. This study tries to see the convoluted nexus between geopolitical events such as political unrest, wars, and policy changes and their impact on international financial institutions. All asset classes—all equities, bonds, currencies, and commodities—are volatile due to geopolitical risks: from diplomatic spats to military conflicts. We then probe our hypotheses of interest using case studies of similar historical events, including the September 11 attacks, the Arab Spring, Brexit, and United States-China trade wars. We demonstrate the response of market players to changes in energy prices, international supply chains, and trade dynamics using these case studies. Global market interdependence increases the spread of geopolitical hazards, thus making algorithmic trading and fast-speed information flow an essential component of market responses. The paper also explores the rising significance of emerging economies such as China and India while taking into account the role international bodies like the World Bank and IMF assume when cutting risks. Third, to tackle geopolitical uncertainty, we go on to explore how ESG factors increasingly impact investment decisions. This research will create a deeper framework in understanding how geopolitical risks affect financial markets and the behaviour of investors by using a mixed-method approach. The document will base the qualitative inputs from case studies, combing those with the quantitative analysis of market data. This article strives to help the investor, politician, and scholar have the opportunity to put together more well-informed strategies for investors to be better prepared or adjusted in dealing with these dynamics.
