Recent elections in Brazil and Israel have yielded different political outcomes. In Brazil, Luiz Inácio Lula da Silva’s narrow and ultimately surprise victory in a presidential runoff vote has kept him in office.

In Israel, meanwhile, an inconclusive election result has left uncertainty over the formation of the next government. These outcomes are likely to have an effect on the stability of the financial systems in both countries.

Historically, financial experts believed elections primarily caused brief, nervous jitters in national stock markets. As prior evidence shows, the impact of political uncertainty is often concentrated around the election period, with short-lived spikes in market volatility.

But our 2026 study of 147 national elections across 22 OECD economies between 2000 and 2023 reveals a much deeper, longer-lasting reality.

To understand this, we must first demystify a common banking term: systemic risk. This is the financial equivalent of a domino effect. It is the danger that a shock to one institution or sector could trigger a widespread collapse across the entire financial system.

We saw this in action on a large scale during the 2008 global financial crisis. At that time, the distress of a few highly interconnected institutions threatened to bring down the entire global financial system. Massive government intervention was required to stop the dominoes from falling.

Our findings show that systemic risk follows a broadly hump-shaped........

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