Curbing the Credit Cycle Aikman, David; Haldane, Andrew G.; Nelson, Benjamin D.
The Economic journal (London),
June 2015, Volume:
125, Issue:
585
Journal Article
Peer reviewed
Credit cycles have been a characteristic of advanced economies for over 100 years. On average, a sustained pick-up in the ratio of credit to GDP has been highly correlated with banking crises. The ...boom phases of the cycle are characterised by large deviations in credit from trend. A range of mechanisms can generate these effects, each of which has strategic complementarity between banks at its core. Macro-prudential policy could curb these credit cycles, both through raising the cost of maintaining risky portfolios and through an expectations channel that operates via banks' perceptions of other banks' actions.
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492.
The cleansing effect of banking crises Gropp, Reint; Ongena, Steven; Rocholl, Jörg ...
Economic inquiry,
July 2022, Volume:
60, Issue:
3
Journal Article
Peer reviewed
Open access
We assess the cleansing effects of the 2008–2009 financial crisis. U.S. regions with higher levels of supervisory forbearance on distressed banks see less restructuring in the real sector: fewer ...establishments, firms, and jobs are lost when more distressed banks remain in business. In these regions, the banking sector has been less healthy for several years after the crisis. Regions with less forbearance experience higher productivity growth after the crisis with more firm entries, job creation, and employment, wages, patents, and output growth. Forbearance is greater for state‐chartered banks and in regions with weaker banking competition and more independent banks.
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What caused the financial crisis that is sweeping across the world? What keeps asset prices and lending depressed? What can be done to remedy matters? While it is too early to arrive at definite ...answers to these questions, it is certainly time to offer informed conjectures, and these are the focus of this paper.
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For researchers and managers interested in performance measurement, this volume includes innovative research that sheds light on topics such as the determinants of disclosure quality, the ...identification of appropriate metrics, the relationship among the different disclosure mechanisms and between voluntary and mandatory disclosure, and many more.
Crisis contagion, or how a crisis spreads from one company to another, has received very little attention from researchers. This is surprising as the negative consequences of crisis contagion can be ...significant when customers make assumptions of guilt by association. This article focuses on this important issue and describes four risk factors—country of origin, industry, organizational type, and positioning strategy—that increase the likelihood of crisis contagion. Valuable guidance is also provided on whether a company should issue a denial or remain silent if it faces the risk of crisis contagion.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK, ZRSKP
Abstract Despite expecting countries to rely on welfare measures in the aftermath of financial crises, one should not ignore the possibility of fiscal retrenchments due to the constraints that those ...crises may bring. This article analyses that issue by assessing the impact of financial crises on governmental social spending and its components (healthcare, education and social protection) using a panel of 108 countries from 1991 to 2019. An important contribution of this study is that it assesses the effects of different types of financial crises (banking, currency and debt) in addition to distinguishing between developed and developing countries. The findings indicate that while developed countries neutralise the adverse effects of crises by increasing social spending, developing countries tend to shrink outlays—in particular healthcare and social protection—when financial crises strike, despite the associated negative consequences on human and social well‐being. Moreover, debt crises proved to be more detrimental to social spending than banking and currency crises in developing countries. An important policy implication arising from our analysis is that governments should maintain a high level of fiscal balance in normal times to be able to finance welfare state expansion programmes during periods of financial crises, especially in emerging/developing countries.
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We propose an ensemble learning methodology to forecast the future US GDP growth release. Our approach combines a Recurrent Neural Network (RNN) and a Dynamic Factor model accounting for ...time-variation in the mean with a Generalized Autoregressive Score (DFM-GAS). We show how our approach improves forecasts in the aftermath of the 2008-09 global financial crisis by reducing the forecast error for the one-quarter horizon. An exercise on the COVID-19 recession shows a good performance during the economic rebound. Eventually, we provide an interpretable machine learning routine based on integrated gradients to evaluate how the features of the model reflect the evolution of the business cycle.
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The article examines the problem of crisis management in conditions of continuous uncertainty. It is considered how leaders and the organisations they lead can maintain reputation, financial and ...operational strength, and competitive advantage in a crisis. The basics of understanding the essence of the crisis, its main factors and origins, are analysed. Leaders are judged on how they deal with the organisation’s most difficult challenges. The article presents the concepts of anti-crisis management, the principles of effective anti-crisis response. The typical mistakes are identified and the possibility of learning through mistakes is explored to reduce losses in a crisis situation.The article will be useful for heads of organisations for making management decisions.
This study examines the relationship between sentiment and the realized volatility of returns for different asset classes (stocks, bonds, foreign currency, and commodities). Specifically, we aim to ...answer two key questions: first, how does sentiment relate to volatility during crises (mainly during the global financial crisis GFC and the COVID‐19 pandemic)? Second, can sentiment be used to forecast volatility during crises? Using two nonparametric methods, mutual information and transfer entropy, we find that information sharing and transfer increased during the pandemic. We also find that sentiment information transfer to the volatility of assets differed between the GFC and the COVID‐19 crisis. Since sentiment can reduce uncertainty around the realized variance of assets, we investigate the forecasting ability of sentiment during crises. We find that sentiment has a greater predictive power on realized volatility during crises, with a differential impact on volatility depending on the asset class. Our findings carry important implications for hedging, risk management and building models to predict variance during crises.
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Crisis history tellers matter Eaddy, LaShonda Louallen; Jin, Yan
Corporate communications,
01/2018, Volume:
23, Issue:
2
Journal Article
Peer reviewed
Purpose
The purpose of this paper is to explore crisis history further. The paper also examines the possible impact of information source on publics’ perceptions. The study seeks to expound on the ...tenets of the situational crisis communication theory (SCCT), particularly the underutilized crisis history component.
Design/methodology/approach
The study used a 3 × 3 between-subjects experiment design to examine the effects of crisis history and information source on publics’ crisis emotions, perception of crisis responsibility, control, and organizational reputation. Participants were 174 undergraduate students from a large Southeastern university.
Findings
The study’s findings suggest that an organization’s crisis history by the media can increase publics’ perceived organizational control (referred to as personal control) in a crisis situation. However, negative crisis history told by the media can evoke more severe public anger in a crisis. A positive crisis history still could lead to negative perceptions.
Research limitations/implications
The study uses a fictional crisis scenario that may not evoke the same emotions or perceptions as an actual crisis.
Practical implications
Crisis communicators concerned with angry publics should focus less on traditional media relations and more on new media to reach other gatekeepers; or focus more heavily on media strategy since the media is more likely to elicit more anger among publics. Furthermore, a positive crisis history does not give organizations a pass in current crises.
Originality/value
Although the SCCT identifies crisis history as an intensifier of attribution of responsibility, few studies have examined crisis history.
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