Impact of geopolitical tensions on industry specific CDS spreads in Europe

Abstract

The purpose of this study is to examine the impact of crises on European industry-level credit default swap (CDS) spreads using linear regression. The two crises analyzed are the COVID-19 pandemic and the Russian invasion and war in Ukraine. Researching geopolitical risk is important because it helps to identify and understand the potential impacts of political and territorial conflicts on financial markets, allowing for informed decision-making and risk management. By analyzing data from the two crises and using linear regres-sion, this study aims to identify how industry-level CDS spreads are affected by these crises. This information can be valuable for policymakers and industry professionals in understanding the potential financial risks associated with different types of crises. The results of this study may also help to inform future research on the relationship between crises and financial market indicators.