Interrelationship dynamics between stock markets of nation under debt crisis and its major trading partners: evidence from Sri Lankan crisis
Abstract A series of crises triggered over a decade may bring global recession, which may impact millions of investors, including countries teetering on the brink due to forex reserve shortages; this study addresses the significant financial event of a small nation declaring bankruptcy. Such events...
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
SpringerOpen
2024-01-01
|
| Series: | Future Business Journal |
| Subjects: | |
| Online Access: | https://doi.org/10.1186/s43093-024-00301-z |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1849726145040220160 |
|---|---|
| author | Shubham Kakran Nishant Sapra Ashish Kumar Arpit Sidhu |
| author_facet | Shubham Kakran Nishant Sapra Ashish Kumar Arpit Sidhu |
| author_sort | Shubham Kakran |
| collection | DOAJ |
| description | Abstract A series of crises triggered over a decade may bring global recession, which may impact millions of investors, including countries teetering on the brink due to forex reserve shortages; this study addresses the significant financial event of a small nation declaring bankruptcy. Such events can have adverse consequences on the global economy, particularly affecting the stock market indices of the country’s trading partners. Our research investigates the impact of small nation bankruptcies on the stock market indices of connected importing and exporting partners. Focusing on the recent political and economic crisis in Sri Lanka, we analyze interactions between the Sri Lankan stock exchange and its key trading partners. Employing pairwise cointegration and the vector auto-regressive model-based Granger causal approach, our findings reveal cointegration among the stock markets in Germany, Italy, and Sri Lanka. Notably, the pre-crisis causal links between the Colombo Stock Exchange and other stock markets have dissolved. These insights hold valuable implications for understanding and preparing for similar circumstances in other South Asian economies grappling with forex shortages and rising inflation. Graphical abstract |
| format | Article |
| id | doaj-art-1695a0181d694337997d15b2fa57f4c9 |
| institution | DOAJ |
| issn | 2314-7202 2314-7210 |
| language | English |
| publishDate | 2024-01-01 |
| publisher | SpringerOpen |
| record_format | Article |
| series | Future Business Journal |
| spelling | doaj-art-1695a0181d694337997d15b2fa57f4c92025-08-20T03:10:17ZengSpringerOpenFuture Business Journal2314-72022314-72102024-01-0110111510.1186/s43093-024-00301-zInterrelationship dynamics between stock markets of nation under debt crisis and its major trading partners: evidence from Sri Lankan crisisShubham Kakran0Nishant Sapra1Ashish Kumar2Arpit Sidhu3Mittal School of Business, Lovely Professional UniversityManagement Development Institute GurgaonDepartment of Commerce, SRM University Department of Commerce, Government College SihuntaAbstract A series of crises triggered over a decade may bring global recession, which may impact millions of investors, including countries teetering on the brink due to forex reserve shortages; this study addresses the significant financial event of a small nation declaring bankruptcy. Such events can have adverse consequences on the global economy, particularly affecting the stock market indices of the country’s trading partners. Our research investigates the impact of small nation bankruptcies on the stock market indices of connected importing and exporting partners. Focusing on the recent political and economic crisis in Sri Lanka, we analyze interactions between the Sri Lankan stock exchange and its key trading partners. Employing pairwise cointegration and the vector auto-regressive model-based Granger causal approach, our findings reveal cointegration among the stock markets in Germany, Italy, and Sri Lanka. Notably, the pre-crisis causal links between the Colombo Stock Exchange and other stock markets have dissolved. These insights hold valuable implications for understanding and preparing for similar circumstances in other South Asian economies grappling with forex shortages and rising inflation. Graphical abstracthttps://doi.org/10.1186/s43093-024-00301-zCo-integration approachEmerging marketsEconomic contagionSri Lanka crisesVector auto-regressive |
| spellingShingle | Shubham Kakran Nishant Sapra Ashish Kumar Arpit Sidhu Interrelationship dynamics between stock markets of nation under debt crisis and its major trading partners: evidence from Sri Lankan crisis Future Business Journal Co-integration approach Emerging markets Economic contagion Sri Lanka crises Vector auto-regressive |
| title | Interrelationship dynamics between stock markets of nation under debt crisis and its major trading partners: evidence from Sri Lankan crisis |
| title_full | Interrelationship dynamics between stock markets of nation under debt crisis and its major trading partners: evidence from Sri Lankan crisis |
| title_fullStr | Interrelationship dynamics between stock markets of nation under debt crisis and its major trading partners: evidence from Sri Lankan crisis |
| title_full_unstemmed | Interrelationship dynamics between stock markets of nation under debt crisis and its major trading partners: evidence from Sri Lankan crisis |
| title_short | Interrelationship dynamics between stock markets of nation under debt crisis and its major trading partners: evidence from Sri Lankan crisis |
| title_sort | interrelationship dynamics between stock markets of nation under debt crisis and its major trading partners evidence from sri lankan crisis |
| topic | Co-integration approach Emerging markets Economic contagion Sri Lanka crises Vector auto-regressive |
| url | https://doi.org/10.1186/s43093-024-00301-z |
| work_keys_str_mv | AT shubhamkakran interrelationshipdynamicsbetweenstockmarketsofnationunderdebtcrisisanditsmajortradingpartnersevidencefromsrilankancrisis AT nishantsapra interrelationshipdynamicsbetweenstockmarketsofnationunderdebtcrisisanditsmajortradingpartnersevidencefromsrilankancrisis AT ashishkumar interrelationshipdynamicsbetweenstockmarketsofnationunderdebtcrisisanditsmajortradingpartnersevidencefromsrilankancrisis AT arpitsidhu interrelationshipdynamicsbetweenstockmarketsofnationunderdebtcrisisanditsmajortradingpartnersevidencefromsrilankancrisis |