Iranian Financial Engineering Association(IFEA) International Journal of Finance & Managerial Accounting 2588-4379 Articles in Press 2026 05 24 Causal Relationship between Permutation Entropy and Financial Market Crises: A Granger Causality Approach 24372 10.22034/ijfma.2026.78676.2292 EN Masoume Ramezani Department of Industrial Management, Science and Research Branch, Islamic Azad University, Tehran, Iran Fraydoon Rahnamay Roodposhti Department of Accounting and Management, Science and Research Branch, Islamic Azad University, Tehran, Iran Ghanbar Abbaspour Esfeden Department of Industrial Management, South Tehran Branch, Islamic Azad University, Tehran, Iran Journal Article 2025 07 27 This study examines the causal relationship between permutation entropy (PE) and financial market crises through a Granger causality framework. Time series data from several major global indices are analyzed to assess whether permutation entropy can effectively serve as a predictor of financial instability. The results indicate that permutation entropy significantly Granger-causes crises in selected markets such as the DAX, Nasdaq 100, and Nikkei 225, suggesting its value as an early warning indicator in those regions. However, no significant predictive relationship is observed for indices including the Dow Jones, S&P 500, Shanghai Composite, SZSE Composite, and TSX Composite. These findings highlight regional differences in the predictive power of permutation entropy , likely shaped by market-specific dynamics and regulatory structures. This research underscores the potential applications and inherent limitations of permutation entropy in crisis forecasting and encourages future studies to incorporate additional nonlinear indicators and localized market factors to improve predictive accuracy.<br>Keywords: Permutation entropy, Financial crises, Granger causality, Time series, Early warning indicator.