How Global Risks Shape Financial Markets in Morocco: Behavioral Responses and Institutional Moderation

Abstract

Global political and economic uncertainties—such as trade tensions, geopolitical conflict, and interest rate volatility—have become major sources of instability in financial markets, particularly in emerging economies. This study investigates how Moroccan financial markets respond to such global risks by combining behavioral finance theory with time-frequency analysis. Using wavelet coherence and structural equation modeling, we analyze the dynamic interactions between global risk indicators (e.g., geopolitical risk, oil prices, policy uncertainty) and Moroccan stock indices (MASI, MASI20) over the period 2022–2025. Our findings reveal that external shocks significantly influence Moroccan market performance, particularly through short-term volatility and synchronized co-movements. Investor behavior—characterized by loss aversion, herding, and anchoring—amplifies the market’s reaction under uncertainty. Moreover, the study highlights the moderating role of institutional quality, business confidence, and foreign direct investment in mitigating the effects of global risk. These results offer new insights into the vulnerability and resilience mechanisms of emerging markets facing global disruptions.