The rise of geo-finance: Financial markets as arenas of International political contestation

Abstract

In this study, the financial markets were analysed by considering the effects of geopolitical tensions and geopolitical risk, financial sanctions, capital flow reallocation, currency power, and financial fragmentation. A qualitative research design was adopted and utilized 60 countries of which 20 were advanced countries, 20 emerging countries and 20 developing countries, were taken using purposeful sampling. International sources, academic research, and reputable financial sources were used to gather secondary evidence. An analysis of the material has been used, which involved the following methods: thematic analysis, comparative analysis, scenario analysis, based on identification of major patterns in the sanitary financial relations of the 21st century. The findings indicate that 81.7 per cent of the countries sampled had higher investor uncertainty in times of geopolitical tensions, 75.0 per cent at the stock market, and 70.0 per cent at the sovereign level. There were significant effects from financial sanctions: 76.7% of countries had higher transaction costs, 71.7% had less international financial access, and 65.0% had lower levels of foreign investment. Financial fragmentation was also seen to have risen, with 73.3 per cent of countries stating a higher preference to deal with geopolitical partners, 66.7 per cent stating that their cross-border banking relationships changed and 70 per cent reporting increased financial cooperation within their region. The results upheld that geopolitical competition had a growing footprint on the behaviors of financial markets, capital allocation, and international economic relations.