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Dynamic financial connectedness among the US, China, and countries of the Belt and Road Initiative

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  • Bazán-Palomino, Walter
  • Winkelried, Diego

Abstract

How have the financial linkages among the US, China, and emerging markets changed since the launch of the Belt and Road Initiative (BRI)? Using intraday data from 2013 to 2023, we study the financial connectedness of stock markets in the US, China, and the regions with BRI countries. Our time-varying measures of connectedness indicate that the BRI has not significantly changed the financial relationships between China and BRI countries nor has it diminished the financial connections between these countries and the US. Our net directional connectedness analysis finds that the Middle East and Africa region, and the Central Asia and Europe region are the most susceptible to shocks from the US and China. Policymakers and investors should be concerned about periods and regions susceptible to American and Chinese financial shocks, as these can increase network connectivity, thereby heightening financial instability and reducing the benefits of portfolio diversification.

Suggested Citation

  • Bazán-Palomino, Walter & Winkelried, Diego, 2025. "Dynamic financial connectedness among the US, China, and countries of the Belt and Road Initiative," Emerging Markets Review, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:ememar:v:66:y:2025:i:c:s1566014125000354
    DOI: 10.1016/j.ememar.2025.101286
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    More about this item

    Keywords

    Financial connectedness; Shock transmission; United States; China; Belt road initiative;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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