Abstract
This article examines how the 2023 Israel–Hamas War, in the context of geopolitical risk, influenced the volatility of Latin American stock markets via transmission channels such as exchange rate fluctuations and oil price dynamics. Our main findings, derived using a Bayesian panel vector autoregression, suggest that, prior to the outbreak, an increase in the exchange rate and oil prices led to higher stock market volatility; however, after the outbreak, the exchange rate depreciation played a role in reducing volatility. This suggests that Latin American markets internalised the geopolitical shock as part of a broader adjustment process instead of a persistent external risk.
| Translated title of the contribution | De la incertidumbre al ajuste: la influencia de la Guerra Israel–Hamás de 2023 en la volatilidad del mercado bursátil latinoamericano |
|---|---|
| Original language | American English |
| Article number | 108131 |
| Pages (from-to) | 108131 |
| Journal | Finance Research Letters |
| Volume | 85 |
| Issue number | D |
| DOIs | |
| State | Published - Nov 2025 |
Keywords
- Bayesian panel VAR
- Financial markets
- Geopolitical risk
- Israel–Hamas War
- Latin America
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