["Economics of Transition and Institutional Change, Volume 34, Issue 2, Page 243-260, April 2026. ", "\nABSTRACT\nEscalating geopolitical conflicts have heightened disruptions to global financial integration and intensified market fragmentation. This research investigates how geopolitical risks drive global financial fragmentation, undermining banking stability and diminishing cross‐border risk diversification. Using an Autoregressive Distributed Lag framework, we analyse fixed effects panel data spanning 47 advanced and emerging economies between 1990 and 2024. Results reveal that growing geopolitical strife amplifies financial fragmentation and elevates short‐term banking sector vulnerabilities. However, institutions with robust capital buffers and stringent non‐performing loan provisions demonstrate enhanced resilience. Long‐term analysis shows geopolitical uncertainties and financial disintegration substantially erode international risk‐sharing capacities, disproportionately affecting emerging markets compared to advanced economies. Policy recommendations highlight critical measures to strengthen financial safeguards, upgrade risk mitigation frameworks and maintain stable foreign direct investment channels.\n"]