Exploring the Nexus between Political Risk and Financial Risk in the Balkan Countries: A Wavelet-Based NARDL Coherency analysis


  • Dr. Sadat Momoh Shuaibu Department of Banking and Finance, Faculty of Economics and Administrative Sciences, European University of Lefke, Northern Cyprus https://orcid.org/0000-0003-3997-7815
  • Assoc. Prof. Dr. Dervis Kirikkaleli Department of Banking and Finance, Faculty of Economics and Administrative Sciences, European University of Lefke, Northern Cyprus https://orcid.org/0000-0001-5733-5045




Political risk, Financial risk, Wavelet analysis, NARDL coherency analysis, Balkan countries, Urban planning, Inclusive growth


The empirical investigation of which risk factor—political or financial—is the optimal driver of country risk in emerging economies in the twenty-first century has grown into a significant and volatile issue in recent decades. This paper investigates the linkages between political risk and financial risk in four Balkan economies (i.e., Greece, Albania, Bulgaria, and Romania) from 1984 Q3 to 2018 Q4, using non-linear autoregressive distributed lag co-integration (NARDL) and wavelet coherence approaches. As a result, findings from the links between political risk and financial risk are being used to provide significant insights into effective urban planning in Balkan cities. The outcomes of the NARDAL analysis indicate that there are short-term and long-term asymmetric links between political risk and financial risk in the Balkan countries except for Romania. The wavelet coherence study also revealed that there is significant vulnerability between political risk and financial risk at different frequencies in the region, also, political risk is a key for predicting financial risk over the selected study period at different frequencies in Albania and Bulgaria.


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Author Biographies

Dr. Sadat Momoh Shuaibu, Department of Banking and Finance, Faculty of Economics and Administrative Sciences, European University of Lefke, Northern Cyprus

Dr. Sadat Momoh Shuaibu is a graduate of the European University of Lefke. She is an alumnus of Glasgow Caledonian University, United Kingdom where she obtained a master's degree in Oil and Gas Accounting. In 2020, Sadat Momoh published an article in Social Science Citation Impact (SSCI) journal. Her research interest includes financial Economics, Econometrics and Risk Analysis.

Assoc. Prof. Dr. Dervis Kirikkaleli, Department of Banking and Finance, Faculty of Economics and Administrative Sciences, European University of Lefke, Northern Cyprus

Dervis Kirikkaleli is the current senior lecturer at the European University of Lefke. He holds a BSc in Economics from Eastern Mediterranean University. He is a University of Stirling (UK) alum, where he completed his MSc and PhD in Banking and Finance. His research area is macroeconomics, environmental economics and financial economics, especially for emerging economies. In 2021, Dervis Kirikkaleli ranked among the top 2% of Scientists in the world by Elsevier BV and Stanford University.


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How to Cite

Shuaibu, S. M., & Kirikkaleli, D. (2022). Exploring the Nexus between Political Risk and Financial Risk in the Balkan Countries: A Wavelet-Based NARDL Coherency analysis. Journal of Contemporary Urban Affairs, 6(2), 249–263. https://doi.org/10.25034/ijcua.2022.v6n2-10