Political Risk

Does it take two to tango: Interaction between Credit Default Swaps and National Stock Indices ArXiv ID: 2512.07887 “View on arXiv” Authors: Yhlas Sovbetov, Hami Saka Abstract This paper investigates both short and long-run interaction between BIST-100 index and CDS prices over January 2008 to May 2015 using ARDL technique. The paper documents several findings. First, ARDL analysis shows that 1 TL increase in CDS shrinks BIST-100 index by 22.5 TL in short-run and 85.5 TL in long-run. Second, 1000 TL increase in BIST index price causes 25 TL and 44 TL reducation in Turkey’s CDS prices in short- and long-run respectively. Third, a percentage increase in interest rate shrinks BIST index by 359 TL and a percentage increase in inflation rate scales CDS prices up to 13.34 TL both in long-run. In case of short-run, these impacts are limited with 231 TL and 5.73 TL respectively. Fourth, a kurush increase in TL/USD exchange rate leads 24.5 TL (short-run) and 78 TL (long-run) reductions in BIST, while it augments CDS prices by 2.5 TL (short-run) and 3 TL (long-run) respectively. Fifth, each negative political events decreases BIST by 237 TL in short-run and 538 TL in long-run, while it increases CDS prices by 33 TL in short-run and 89 TL in long-run. These findings imply the highly dollar indebted capital structure of Turkish firms, and overly sensitivity of financial markets to the uncertainties in political sphere. Finally, the paper provides evidence for that BIST and CDS with control variables drift too far apart, and converge to a long-run equilibrium at a moderate monthly speed. ...

Early-Warning Signals of Political Risk in Stablecoin Markets: Human and Algorithmic Behavior Around the 2024 U.S. Election ArXiv ID: 2512.00893 “View on arXiv” Authors: Kundan Mukhia, Buddha Nath Sharma, Salam Rabindrajit Luwang, Md. Nurujjaman, Chittaranjan Hens, Suman Saha, Tanujit Chakraborty Abstract We study how the 2024 U.S. presidential election, viewed as a major political risk event, affected cryptocurrency markets by distinguishing human-driven peer-to-peer stablecoin transactions from automated algorithmic activity. Using structural break analysis, we find that human-driven Ethereum Request for Comment 20 (ERC-20) transactions shifted on November 3, two days before the election, while exchange trading volumes reacted only on Election Day. Automated smart-contract activity adjusted much later, with structural breaks appearing in January 2025. We validate these shifts using surrogate-based robustness tests. Complementary energy-spectrum analysis of Bitcoin and Ethereum identifies pronounced post-election turbulence, and a structural vector autoregression confirms a regime shift in stablecoin dynamics. Overall, human-driven stablecoin flows act as early-warning indicators of political stress, preceding both exchange behavior and algorithmic responses. ...

The Roberts Court’s Assault on Democracy ArXiv ID: ssrn-3540318 “View on arXiv” Authors: Unknown Abstract This article argues that economic and political developments in the last fifty years have in many respects undermined America’s democratic institutions and that Keywords: Political Risk, Institutional Economics, Macroeconomics, Economic Policy, Governance, Macro Complexity vs Empirical Score Math Complexity: 0.0/10 Empirical Rigor: 0.0/10 Quadrant: Philosophers Why: The paper is a legal and political commentary on the Roberts Court’s impact on democracy, with no mathematical or empirical analysis of financial markets. flowchart TD A["Research Question<br>How has the Roberts Court<br>impacted American Democracy?"] --> B["Methodology: Case Law &<br>Historical Institutional Analysis"] B --> C["Inputs: Decisions,<br>Campaign Finance Data,<br>Political Polarization Metrics"] C --> D["Computational Process<br>Cost-Benefit &<br>Institutional Risk Analysis"] D --> E["Key Findings<br>Erosion of voting rights,<br>wealth-influenced policy,<br>gridlock in governance"]

Greed and Grievance in Civil War ArXiv ID: ssrn-630727 “View on arXiv” Authors: Unknown Abstract Of the 27 major armed conflicts that occurred in 1999, all but two took place within national boundaries. As an impediment to development, internal rebellion es Keywords: Armed Conflict, Internal Rebellion, Development Economics, Political Risk, Military Spending, Macro-Economics / Geopolitical Risk Complexity vs Empirical Score Math Complexity: 1.0/10 Empirical Rigor: 3.0/10 Quadrant: Philosophers Why: The paper is a qualitative social science analysis of civil wars, lacking advanced mathematical formulas or statistical modeling. While it uses empirical data (e.g., conflict counts from 1999), it does not present backtests, code, or implementation-heavy quantitative analysis. flowchart TD A["Research Question: What drives internal rebellion?<br>Separating 'Greed' vs. 'Grievance'"] --> B["Key Methodology<br>Statistical Analysis of Civil War Onsets"] B --> C["Data Inputs<br>Armed Conflict Database & Macroeconomic Data"] C --> D["Computational Process<br>Regression Models on Conflict Probability"] D --> E["Key Finding: Feasibility matters<br>Low state capacity & high illicit rents<br>increase rebellion risk (Greed)"] D --> F["Key Finding: Opportunity matters<br>Economic inequality & political exclusion<br>drive conflicts (Grievance)"]