Geopolitical Conflict and Financial Market Volatility in the Middle East: Evidence from the Syrian Civil War

This study takes the Syrian civil war as a case, selecting key conflict events such as the Battle of Aleppo (2012), the chemical weapons crisis (2013), and the Russian military intervention (2015). By using event study methods and volatility comparison analysis, it systematically examines the immediate impacts of these events on the financial markets of major Middle Eastern countries and their regional spillover effects. Based on UCDP conflict data and daily stock indices, exchange rates, and credit default swap (CDS) spreads of Syria, Turkey, and Israel, this study constructs a "source-receiving end" shock transmission model. Under the control of global macroeconomic factors, it deeply analyzes the transmission mechanism of cross-border diffusion of geopolitical risks. The results indicate that key conflict events significantly increased Syrian financial market volatility, with stock indices declining, exchange rates depreciating, and CDS spreads widening, thereby confirming H1. The shocks were rapidly transmitted to neighboring countries, with the Turkish market responding most sensitively, while the Israeli market showed a slightly delayed reaction but still exhibited significant abnormal volatility. Spillover intensity decreased with geographic distance, supporting H2. Exchange rates and CDS were more sensitive to short-term uncertainty shocks, reflecting the critical role of capital flows and risk premiums. The study emphasizes the importance of establishing regional financial monitoring collaboration mechanisms, improving exchange rate and capital flow early-warning systems, and implementing contingency-based regulation for key events, providing empirical guidance for understanding the transmission of geopolitical risks in the Middle East, investor risk management, and policy-making.