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Institutional checks and balances, financial costs, and geopolitical risks

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  • Li, Jialin

Abstract

This study utilizes panel data at the national level from 2001 to 2023 to explore the relationship between institutional checks and balances, financial costs, and geopolitical risks. The findings reveal that a higher level of institutional checks and balances corresponds to a lower level of geopolitical risk; financial costs play a mediating role between institutional checks and balances and geopolitical risks; the impact of institutional checks and balances on geopolitical risks varies across countries with different levels of economic development; and the effect of institutional checks and balances on geopolitical risks is heterogeneous across countries with different tariff levels. Additionally, the maturity of financial institutions moderates the relationship between institutional checks and balances and geopolitical risks. Based on these findings, this study proposes policy recommendations to strengthen institutional construction, promote the stability of financial systems, enhance financial service levels, and optimize trade policies to help countries address the increasingly complex challenges of geopolitical risks.

Suggested Citation

  • Li, Jialin, 2026. "Institutional checks and balances, financial costs, and geopolitical risks," Economic Analysis and Policy, Elsevier, vol. 92(C), pages 630-640.
    • Handle: RePEc:eee:ecanpo:v:92:y:2026:i:c:p:630-640
    DOI: 10.1016/j.eap.2026.05.025
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