Geopolitical Tensions and Market–Behavioral Responses: A Dual Perspective From Investors and Travelers on the Korean Peninsula

Abstract

This study examines how inter-Korean political and economic events affect financial markets and tourism behavior by integrating investor and traveler perspectives. Using 167 events (1991–2024), Study 1 applies an event-study to 20 publicly listed South Korean tourism and hospitality firms, separating positive and negative announcements. Study 2, an experiment with 240 Korean participants, tests whether perceived geopolitical risk mediates effects on domestic and international travel intentions. Results show immediate market reactions: positive events yield larger, more persistent gains than negative ones, while higher perceived risk significantly reduces travel intentions. Findings challenge prospect theory’s loss aversion and instead support desensitization, whereby repeated tensions dampen investor sensitivity to adverse news.