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The Volatile Effect of Conflict Risk on Foreign Investment

Author

Listed:
  • Umit Hacioglu

    (Beykent University, Department of Capital Markets and Portfolio Management, Beylikduzu Campus, Istanbul, 34500, Turkey)

  • Hasan Dincer

    (Beykent University, Department of Capital Markets and Portfolio Management,Beylikduzu Campus, Istanbul, 34500, Turkey)

  • Ä°. Erkan Celik

    (Beykent University, Department of Banking and Finance, Ayazaga Campus, Istanbul, 34500, Turkey)

Abstract

The opportunities of investment brought along by the global economic integrity might turn into a threat in an instant and undermine the underlying structures of national economies. It is necessary to analyze the conflict risk properly in terms of both portfolio investment and finance strategies. This is an important step to be included in the process of arriving to a rational decision. In that way, the existing investment risks could be priced more efficiently. It is proved on Collier and Starr models that there is a correlation between the conflict risk and unemployment, economic recession, inflation and fiscal discipline. In brief, the breakdown in the economic parameters increases the conflict risk and a progress occurring in the opposite way, decreases that risk. In this study, it is discussed the effects of the conflict risk for foreign investment availabilities

Suggested Citation

  • Umit Hacioglu & Hasan Dincer & Ä°. Erkan Celik, 2013. "The Volatile Effect of Conflict Risk on Foreign Investment," International Journal of Research in Business and Social Science, Society for the Study of Business & Finance, vol. 2(1), pages 57-66, January.
  • Handle: RePEc:rbs:ijbrss:v:2:y:2013:i:1:p:57-66
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