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The ripple effect: trade linkages and the stock market response to the Russia–Ukraine war

Author

Listed:
  • Marcus Biermann

    (Bielefeld University
    Centre for Economic Performance)

  • Elsa Leromain

    (Centre for Economic Performance
    University of Antwerp
    IRES/LIDAM, UCLouvain)

Abstract

This paper investigates how firms’ international linkages to Russia and Ukraine affected investors’ expectations following the escalation of the Russian–Ukrainian war. For this, we perform an event study around the Russian invasion of Ukraine on February 24, 2022, finding that firms with significant trade activity with Russia experienced a substantial reduction in cumulative returns. The effect on cumulative returns is especially pronounced for firms that are dependent on Russian commodities. The overall impact on the aggregate stock market performance of third countries was on average 1.5 percentage points. The highest losses were borne by European countries.

Suggested Citation

  • Marcus Biermann & Elsa Leromain, 2025. "The ripple effect: trade linkages and the stock market response to the Russia–Ukraine war," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 161(4), pages 1637-1660, November.
    • Handle: RePEc:spr:weltar:v:161:y:2025:i:4:d:10.1007_s10290-025-00594-4
    DOI: 10.1007/s10290-025-00594-4
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    Keywords

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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