Jeopolitik Risk Endeksinin Türkiye’de BIST Banka Endeksi Üzerine Etkisi
The Effects of Geopolitical Risk Index on the BIST Bank Index in Türkiye

Summary/Abstract: Geopolitical risks that countries face can negatively affect economic stability by posing potential threats. These risks generally refer to situations that increase political and economic uncertainty for countries and lead to negative outcomes. In this context, geopolitical risks have direct and/or indirect effects on the economies of countries. The banking sector is extremely sensitive to macroeconomic conditions and stands out as one of the sectors most affected by geopolitical developments. The primary aim of this study is to examine the impact of the Geopolitical Risk Index on the BIST Banks Index. In this research, the BIST Banks Index, which reflects the performance of 12 banks, is utilized as the dependent variable, while Türkiye’s Geopolitical Risk Index data-sourced from the Economic Policy Uncertainty website-is used as the independent variable. The analysis is based on monthly data covering the period from February 1, 1997, to December 1, 2022. The TodaYamamoto causality test is employed to investigate the direction of the causal relationship between the BIST Banks Index and the Geopolitical Risk Index. The findings derived from the analysis reveal the existence of a unidirectional causality running from the Geopolitical Risk Index to the BIST Banks Index. The findings highlight the importance of policymakers developing strategies to reduce geopolitical risks and taking measures to reduce the fragility of the banking sector.

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