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Evaluation of conflict hazard and financial risk in the E7 economies’ capital markets

Author

Listed:
  • Umit Hacioglu

    () (Beykent University, School of Applied Sciences, Istanbul, Turkey)

  • Hasan Dincer

    (hasandincer@beykent.edu.tr)

Abstract

The purpose of this research is to examine the interaction between financial stress and conflict risk having impacts on financial instruments in capital markets within an interdisciplinary frame. The Fuzzy TOPSIS method is applied in order to analyse effects of conflict hazard on capital markets and financial instruments in the E7 economies and to demonstrate the best possible ranks of the E7 economies based on performance evaluation criteria. In order to obtain the dynamics of data as to develop a sufficient reference bases for expert opinions, conflict hazard index and financial stress index have been structured. The empirical results confirm that there is strong relation between financial stress index and conflict hazard index for the E7 economies. The fundamental conclusion demonstrates the effects of the financial and conflict risks for the stock selection in the E7 economies by the criteria derived from the Financial Stress Index and Conflict Risk Index.

Suggested Citation

  • Umit Hacioglu & Hasan Dincer, 2013. "Evaluation of conflict hazard and financial risk in the E7 economies’ capital markets," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 31(1), pages 79-102.
  • Handle: RePEc:rfe:zbefri:v:31:y:2013:i:1:p:79-102
    as

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    References listed on IDEAS

    as
    1. Naes, Randi & Skjeltorp, Johannes & Odegaard, Bernt Arne, 2008. "Liquidity and the Business Cycle," UiS Working Papers in Economics and Finance 2009/1, University of Stavanger.
    2. Andrade, Sandro C., 2009. "A model of asset pricing under country risk," Journal of International Money and Finance, Elsevier, vol. 28(4), pages 671-695, June.
    3. Illing, Mark & Liu, Ying, 2006. "Measuring financial stress in a developed country: An application to Canada," Journal of Financial Stability, Elsevier, vol. 2(3), pages 243-265, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    financial risk; conflict; financial stress; Fuzzy; TOPSIS;

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • G1 - Financial Economics - - General Financial Markets

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