THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS

Yaşam Demir

doi:10.29228/JORE.57

THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS

Abstract

This study examines how geopolitical risk (GPR) shocks propagate across Turkish financial markets within a Local Projection (LP) framework using daily data from January 2016 to January 2026. Given Türkiye’s position at the intersection of Europe, Asia, and the Middle East, understanding how safe-haven and risk-sensitive markets respond to geopolitical disturbances is critical for assessing financial stability. The analysis addresses the limited availability of high frequency evidence on this transmission mechanism and contributes by jointly evaluating returns in the gold, equity, and banking sectors within a unified empirical setting. GPR shocks are proxied by rolling-standardised daily changes in the news-based Geopolitical Risk Index developed by Caldara and Iacoviello (2022). By estimating horizon-specific impulse responses, the LP approach captures differences in the timing, speed, and persistence of market adjustments. The results reveal a clear temporal ordering: gold exhibits an immediate but short-lived response reflecting safe-haven behaviour; equity markets display a delayed negative reaction indicative of gradual risk repricing; and banking-sector returns show weaker and statistically imprecise responses. Robustness checks support the qualitative stability of these findings. Overall, the analysis provides high-frequency evidence directly relevant to systemic risk monitoring and the design of forward-looking macroprudential policies in geopolitically exposed economies. In this sense, the analysis provides high-frequency evidence that is directly relevant for systemic risk monitoring and the design of macroprudential policies in geopolitically exposed emerging economies.

Keywords

References

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Details

Primary Language

English

Subjects

Applied Macroeconometrics, Econometrics (Other)

Journal Section

Research Article

Authors

Yaşam Demir ^*
0000-0001-9482-1456
Türkiye

Publication Date

October 20, 2026

Submission Date

February 8, 2026

Acceptance Date

June 20, 2026

Published in Issue

Year 2026 Volume: 10 Number: 2

DOI

https://doi.org/10.29228/JORE.57

IZ

https://izlik.org/JA24LY75XH

Cite

RIS / Bibtex

APA

Demir, Y. (2026). THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS. Journal of Research in Economics, 10(2), 117-142. https://doi.org/10.29228/JORE.57

AMA

1.Demir Y. THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS. JORE. 2026;10(2):117-142. doi:10.29228/JORE.57

Chicago

Demir, Yaşam. 2026. “THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS”. Journal of Research in Economics 10 (2): 117-42. https://doi.org/10.29228/JORE.57.

EndNote

Demir Y (October 1, 2026) THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS. Journal of Research in Economics 10 2 117–142.

IEEE

[1]Y. Demir, “THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS”, JORE, vol. 10, no. 2, pp. 117–142, Oct. 2026, doi: 10.29228/JORE.57.

ISNAD

Demir, Yaşam. “THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS”. Journal of Research in Economics 10/2 (October 1, 2026): 117-142. https://doi.org/10.29228/JORE.57.

JAMA

1.Demir Y. THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS. JORE. 2026;10:117–142.

MLA

Demir, Yaşam. “THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS”. Journal of Research in Economics, vol. 10, no. 2, Oct. 2026, pp. 117-42, doi:10.29228/JORE.57.

Vancouver

1.Yaşam Demir. THE DYNAMIC EFFECTS OF GEOPOLITICAL RISK SHOCKS ON GOLD, EQUITY, AND BANKING MARKETS UNDER GLOBAL VOLATILITY: EVIDENCE FROM TÜRKIYE USING LOCAL PROJECTIONS. JORE. 2026 Oct. 1;10(2):117-42. doi:10.29228/JORE.57