Geopolitical Risk and the Financialization of Firm Vulnerability in Emerging Markets

This study investigates the impact of geopolitical instability on corporate financial performance in emerging Asian economies by examining the mediating roles of supply chain resilience, currency volatility, and foreign investment confidence. The research adopts a quantitative cross-sectional design using survey data collected from 308 firms operating across Southeast Asia. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to evaluate the structural relationships among geopolitical risk factors and firm-level financial outcomes. The findings demonstrate that geopolitical instability significantly influences corporate financial performance primarily through financial transmission mechanisms. Currency volatility and foreign investment confidence emerge as the strongest mediating variables, indicating that exchange rate fluctuations and investor sentiment substantially shape firm performance under geopolitical uncertainty. In contrast, supply chain resilience improves operational adaptability but does not exert a statistically significant direct effect on financial performance. The model explains 66.7% of the variance in corporate financial performance, indicating substantial explanatory power. This study contributes to the literature by integrating operational, financial, and institutional perspectives into a unified framework of geopolitical risk transmission. The findings also provide managerial and policy implications, emphasizing the importance of financial risk management, institutional stability, governance transparency, and strategic resilience in mitigating the adverse effects of geopolitical turbulence in emerging Asian economies.