2024/10/16 by JONATHAN FEDERLE, Jonathan Federle, André Meier +5 · 71 citations
Economics, Econometrics and Finance · Environmental Science · #Business #Economic Sanctions and International Relations #Economics #Environmental and Biological Research in Conflict Zones #Financial system #Geography #Market Dynamics and Volatility #Stock (firearms) #Stock market
paper · pdf · doi:10.1111/jmcb.13226
published in Journal of money credit and banking 58(3), 681-703 (Wiley)
openalex publication_date 2024/10/16 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/03
Abstract We identify a “proximity penalty” in the stock market response to the Russian invasion of Ukraine: the closer countries are to Ukraine, the lower their equity returns in a four‐week window around the start of the war. This result holds even at the firm level within Ukraine's neighbors. Trade linkages explain two‐thirds of the proximity penalty. We attribute the remainder—1.1 percentage points in equity returns per 1,000 km of extra distance—to military disaster risk. Evidence from other financial data, geopolitical risk indicators, and aid flow statistics supports the relevance of military tail risk as a spillover channel.