The impact of globalization on stock market volatility: The case of BRICS-T countries

Globalization is a process in which economic, financial, commercial, political, and social relationships intensify worldwide. Since the 1980s, many countries have prioritized globalizing their economies. In this context, globalization is an important issue for the world economy and financial markets. Along with globalization, many countries' economic and development potentials have increased, while also significantly impacting the volatility of stock markets. This volatility is manifested in sudden rises or falls in stock prices. Therefore, this research aims to investigate whether there is a relationship between globalization, which holds a significant place in the world economy, and the volatility of stock markets, which are important investment instruments, and to examine the effect of globalization on the stock market. The study focuses on Brazil, Russia, India, South Africa, China, and Turkey (BRICS-T) countries, which are similar in size and potential in the global economy. The research considers stock market volatility as the dependent variable and considers economic, commercial, political, financial, social, cultural globalization, and economic freedom indices as independent variables. We used panel data analysis and Granger causality analyses to measure the effects of globalization on the stock market. The research concluded that globalization has a negative effect on stock market volatility. According to the findings of the Granger causality test, there is a bidirectional causal relationship between commercial and political globalization and volatility, while there is a unidirectional causal relationship from the general globalization index, social, economic, and financial globalization indices, and the economic freedom index to volatility. No causal relationship was found between the cultural globalization index and volatility.