Geopolitical Risk and International Portfolio Investments: Findings from Emerging Market Economies
Ekonomi-tek, cilt.15, sa.2, ss.333-365, 2026 (TRDizin)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 15 Sayı: 2
- Basım Tarihi: 2026
- Doi Numarası: 10.65653/ekonomitek.2000094
- Dergi Adı: Ekonomi-tek
- Derginin Tarandığı İndeksler: TR DİZİN (ULAKBİM)
- Sayfa Sayıları: ss.333-365
- Açık Arşiv Koleksiyonu: AVESİS Açık Erişim Koleksiyonu
- Atatürk Üniversitesi Adresli: Evet
Özet
Geopolitical risks function not only as country-specific shocks but also as global risk factors affecting international capital flows. This effect is particularly pronounced in emerging economies, which are more vulnerable to fluctuations in portfolio investments due to their fragile financial structures. This study investigates the impact of geopolitical risk on foreign portfolio investments in emerging market economies using a financial gravity model. The analysis covers foreign portfolio investments of 97 countries over the 2001–2024 period. To distinguish the effects of geopolitical risk on portfolio preferences and actual investment amounts, the financial gravity model is estimated using the Heckman Selection Model. The findings show that geopolitical risk significantly reduces foreign portfolio investments, as investors tend to avoid politically uncertain destinations. The results also reveal regional heterogeneity across emerging Asia, Europe, Latin America, and Africa, with investors in Latin America and Africa exhibiting the strongest responses to increases in geopolitical risk.
JEL Codes: C33, F51, G11
Keywords: Geopolitical Risk, Foreign Portfolio Investments, Gravity Model, Selection Model.