THE IMPACT OF ECONOMIC SANCTIONS ON FINANCIAL MARKETS: A REVIEW OF SCIENTIFIC RESEARCH

Abstract

Current scientific research claims that economic sanctions are becoming an increasingly popular tool to limit the activities of certain entities in today's world. Although sanctions are one of the ways to ensure peace and security in the world, they come with their costs and impact not only the sanctioned entities, but also the world economy and, consequently, financial markets, which are an integral part of the world economy. Sanctions introduce tension and uncertainty to financial markets, leading to increased inefficiency and larger price fluctuations as market participants adjust their behavior. Sanctions can also lead to the possibility of economic crises, destabilization of the financial system and bankruptcies of business enterprises. The topic of economic sanctions became even more relevant after the beginning of the Russian-Ukrainian war. Undoubtedly, economic sanctions are a crucial source of information for financial markets and their participants. Scientific research reveals that comprehensive analysis of sanctions and financial markets during the sanction periods, along with an understanding of historical events, monitoring and following news on social media, and adapting this information to create effective investments strategies can be tools to mitigate the impact of sanctions and control imbalances in financial markets. Future research can be directed to deeper analyzes of the protection of financial markets from the negative effects of economic sanctions; trends in the development of financial market networks during sanction implementation and tightening periods; deeper analysis of the relationship between economic sanctions, market participants' sentiments and media news.