The Role of Ownership Concentration and Debt in Downturns: Evidence from Brazilian Firms During the 2008–9 Financial Crisis

This article aims to reconcile conflicting literature about the role of ownership concentration in the responsiveness of stock prices to macroeconomic shocks. We modified a previous theoretical model, adding leverage as a disciplining device. An important implication of our model is that only in deep crises ownership concentration plays a role in attenuating the effect of macroeconomic shock on firm value. We test this hypothesis using a sample of Brazilian firms during distinct phases of the 2008–9 crisis. Our empirical analyzes shows that only in the most critical part of the crisis, ownership concentration reduced the negative effects of the financial crisis.     

Risk communication and social media during food safety crises: a study of stakeholders’ opinions in Ireland

Social media is a particular communication platform which has witnessed an exponential growth in use and influence in recent years, democratising the communication process, and offering risk communicators a way of putting into practice those principles which are advocated to be at the core of risk management and communication. However, little is known about stakeholders’ willingness to embrace this new form of communication in a food crisis. The current study presented an exploratory investigation of the opinions of Irish stakeholders on the position of risk communication in a crisis, with a particular focus on understanding what application social media may have. In-depth one-to-one interviews were carried out with key stakeholders holding frontline positions in managing and communicating about risk in the food sector in Ireland. The stakeholders identified risk communication as a central activity in a food safety crisis, driven by an obligation to protect both consumer health and the reputation of the Irish food sector. Stakeholders relied primarily on risk communication to disseminate information in a crisis so to educate and inform the public on a risk and to prevent confusion and alarmism; most did not explicitly value two-way risk communication in a crisis. The ability to effectively manage future crises may depend on stakeholders’ willingness to adapt to the changing communication landscape, namely – their willingness to adopt social media and use it effectively. The findings indicate that the stakeholders interviewed are appreciative of the need to engage with social media in times of a food safety crisis. However, most valued social media as a one-way channel to help spread a message and there was little reference to the interactive nature of this medium. Implications for integrating social media into crisis risk communication strategies are discussed.     

Crisis risk and risk management

We assess the state of knowledge about crisis risk and its implications for risk management. Data that became available after the global financial crisis show that some types of crises are predictable when accounting for interactions between risks. However, other types of crises do not seem predictable. There is no evidence that the frequency of economic and financial crises is increasing. While data show that an economic crisis is more likely following a political crisis, there is no comparable evidence for climate events. Strategies that increase firm operational and financial flexibility reduce the adverse impact of crises on firms.     

Risk and crisis communication narratives in response to rapidly emerging diseases

The uncertainty inherent in crises can create a narrative space that is often filled by multiple interpretations about both what is happening and what steps should be taken to resolve the crisis. As more information becomes known, these competing crisis narratives gradually merge into a dominant narrative about the crisis, lessons learned from it, and recommendations for the future. This case study examines the swine industry’s response to the Porcine Epidemic Diarrhea virus (PEDv) outbreak. The virus spread rapidly throughout the industry and, in a matter of months, had killed approximately 10% of the U.S. swine population. This analysis examines the crisis communication that ensued during that time. More specifically, 13 specialists representing the National Pork Board, American Association of Swine Veterinarians, veterinarians highly active in treating PEDv, university extension agents, and academic researchers were interviewed for this study. A narrative analysis of the interview content revealed that communication efforts made by swine industry leaders successfully shifted the PEDv story from that of competing narratives to a dominant narrative that helped resolve the crisis efficiently. This success is attributed, in part, to effective use of all available industry resources for both conducting research and sharing information rapidly through pre-established communication networks and widely read resources. Results of this narrative analysis reveal a key recommendation that maybe generalizable to similar crisis events. That is, an effective crisis narrative should focus not only on what protective actions to take, but also on a clear explanation regarding the nature of the crisis. Moreover, such explanations must be translated intelligibly to diverse non-scientific publics and provide a compelling rationale for why the recommended actions are vital.     

The way we live now: Financialization and securitization

Securitization is a global multi-trillion dollar market that embodies financialization. Prior to the recent financial crisis, securitization fueled an unsustainable increase in mortgage credit. As the recent financial crisis reveals, securitization increased credit market volatility and was heightened by a reliance on debt and incentive schemes that focused on short-term profits. As extensive global reform of the securitization market takes place, there are serious reservations about the sustainability of securitization. In this paper I provide a critical perspective on securitization through a number of lenses. The story of securitization comes down to the globalization of finance and the declining importance of banks. I provide an historical assessment of securitization as well as its rise and fall over the last four decades. I also provide a critical perspective on the role of ethics and risk management in securitization in the context of the recent financial crisis. Finally, as many agencies reconsider the future of securitization, I discuss whether all assets are necessarily suitable candidates for the process.     

Risk cultures and dominant approaches towards disasters in seven European countries

This paper builds upon the risk culture concept started with Mary Douglas’ and Aaron Wildavsky’s seminal work on risk and culture. Based upon the empirical results of a qualitative sociological study on sociocultural factors affecting risk perception and crisis communication in seven European countries, a theoretical model, illustrating how differences in disasters framing imply diverse approaches to risk and disaster management, is suggested. According to this framework, culturally bounded assumptions and conventions strongly influence how communities make sense of risks and hazards and how these communities consider some ways of dealing with disasters more appropriate than others. The framework suggested in this article distinguishes between risk cultures of a given society, which do not necessarily respond to nation states. In order to explain differences in how cultures deal with risks and disasters, and to define the main features of our typology, three main interrelated dimensions have been selected: disaster framing, trust in authorities and blaming. By analyzing differences and similarities in how people perceive and interpret disasters, as well as to whom the responsibility for risk prevention and crisis management is attributed, in seven European countries, three specific ideal types of risk cultures emerged: state-oriented risk culture, individual-oriented risk culture and fatalistic risk culture. Implications for crisis management and communication in case of a disaster will be addressed for each of these risk cultures.     

危机后影子银行的国际监管改革及对我国的启示

本轮金融危机的爆发表明,影子银行天生具有的表外性、高杠杆性和证券化运行机理,一旦疏于监管就极易引发系统性风险和法律风险。危机后国际金融监管组织和美英欧等各大经济体纷纷出台强化影子银行监管的金融监管改革法案。我国应结合自身情况,探索和构建适合我国金融业发展实际的影子银行监管制度。     

Time varying contagion in EMU government bond spreads

We analyze the time varying behavior of pure contagion effects between Economic and Monetary Union (EMU) government bond spreads before and during the subprime mortgage crisis and the EMU debt crisis. By conducting a rolling window analysis, we are able to monitor the evolution of pure contagion effects and the changing influence of exogenous factors over time. Importantly, this is done without an ex-ante specification of the contagion window. Hence, we are able to determine the exact timing of the start and end for the different contagion periods. In contrast to related studies, we use a slightly different definition of contagious events and show that this approach leads to different conclusions about the progression of the EMU debt crisis. First, the main sources of pure contagion in the later phase of the EMU debt crisis appear to be Italy and Spain and not Greece, Ireland and Portugal. Furthermore, we find that substantial contagion effects among EMU government bond spreads (caused by Ireland and Portugal) already arise during the subprime mortgage crisis and not only during the EMU debt crisis, as one might expect.     

Investigating explanatory theories on laypeople’s risk perception of personal economic collapse in a bank crisis – the Cyprus case

We investigate the explanatory power of decision, psychometric, and trust theory to describe laypeople’s risk perception of personal economic collapse in a bank crisis. The aim of this investigation is to improve the understanding of the effects of national initiatives for crisis fighting taken to prevent systemic risk. Using a stratified sample of 738 Cypriote citizens, we conducted an investigation in Cyprus in the spring of 2013 when the country was facing a bank crisis. At that point in time, the Cypriote Government had imposed capital controls to prevent a bank run. We find that decision theory variables alone have low explanatory value on laypeople’s risk perception, and that laypeople’s risk perception in this situation is affected primarily by psychometric variables. Further, confidence in one’s own bank also explains risk perception. Our findings contribute novel knowledge about risk perceptions in a financial crisis, with practical crisis management implications for regulators.     

次贷危机后的保险业风险管理问题

2007年美国发生的次级贷危机再次将风险与风险管理的问题摆在了全球金融业面前,而以风险为主营业务的保险业更需要系统思考风险管理对于本行业健康运营的内在意义。本文从风险管理行为动机、非系统性风险的分散、系统性风险的控制三个方面分析了保险业影响危机发生及受到危机冲击的原因,进一步明确了今后保险业风险管理的发展方向,并提出通过建立合理目标、完善信息沟通机制和治理结构等为风险管理提供有效内部支持。     

Role of financial regulation and innovation in the financial crisis

Using the financial and macroeconomic dataset of 132 countries, this study empirically analyzes the effects of financial regulations and innovations on the global financial crisis. It shows that regulatory measures such as restrictions on bank activities and entry requirements have decreased the likelihood of a banking crisis, while capital regulation and government ownership of banks have increased the likelihood of a currency crisis. Financial innovation has contributed to the banking crisis but contained the currency crisis. This study also shows that judicious implementation of regulatory measures is critical to financial stability because some regulations, if implemented simultaneously, can further aggravate or alleviate a crisis.     

加强市场基础建设 提高风险预警能力——希腊主权债务危机的反思

近来,希腊债务危机成为全球经济舆论的焦点。文章指出,希腊债务危机是希腊经济自身缺陷、主权债务信息披露不完善、欧元区体制弊端等问题的集中体现。借鉴希腊债务危机的教训,我们应进一步强化信息披露对金融市场发展基础性作用的认识,通过发展直接融资促进地方政府融资的显性化,并尽快建立和完善我国金融市场的风险监控、预警和处理机制。     

The Federal Reserve and the 2007–2009 Financial Crisis: Treating a Virus with Antibiotics? Evidence from the Commercial Paper Market

The two main explanations for the crisis in the commercial paper (CP) market are credit concerns and liquidity issues. The CP market is not homogeneous in terms of credit quality, maturities and types of issues. We find that lower credit‐quality CP suffered more during the crisis. Additionally, we find little evidence that Federal Reserve (Fed) liquidity facilities reduced the impact of the crisis, but that when the Fed became a lender in the CP market, the crisis pressures were dramatically reduced. We conclude that the crisis in the money markets is related more to increases in credit risk. Liquidity is a secondary issue.     

Tail dependence and indicators of systemic risk for large US depositories

In this study, we investigate the extreme loss tail dependence between stock returns of large US depository institutions. We find that stock returns exhibit strong loss dependence even in their limiting joint extremes. Motivated by this result, we derive extremal dependence-based systemic risk indicators. The proposed systemic risk indicators reflect downturns in the US financial industry very well. We also develop a set of firm-level average extremal dependence measures. We show that these firm-level measures could have been used to identify the firms that were more vulnerable to the 2007–2008 financial crisis. Additionally, we explore the performance of selected systemic risk indicators in predicting the crisis performance of large US depository institutions and find that the average stock return correlations are also good predictors of crisis period returns. Finally, we identify factors predictive of extremal dependence for the US depository institutions in a panel regression setting. Strength of extremal dependence increases with asset size and similarity of financial fundamentals. On the other hand, strength of extremal dependence decreases with capitalization, liquidity, funding stability and asset quality. We believe the proposed indicators have the potential to inform the prudential supervision of systemic risk.     

我国房地产业蕴含的金融风险及相关政策调整

本文对当前我国房地产业发展的总体情况和存在的突出矛盾进行了考察,并在此基础上,总结了上个世纪80年代以来发生的典型房地产泡沫危机,分析了房地产泡沫危机和金融危机的关系,以及目前我国房地产业潜在的风险．提出了促进我国房地产业健康发展的政策建议．自去年开始,我国政府针对房地产市场过热的问题实行了从紧的宏观调控措施．这次宏观调控的效果显现时间与美国由次贷问题引发的金融危机相重合。在国内经济政策调整和国际经济环境恶化这样一个大背景下．正确判断我国房地产市场发展情况,分析房地产市场与金融运行之间的相互影响,对于稳步实施房地产业政策调整。防范房地产泡沫与金融风险,促进房地产业、金融和经济的健康发展具有重要意义。     

Early warning systems and systemic banking crises in low income countries: A multinomial logit approach

This paper estimates an early warning system (EWS) for predicting systemic banking crises in a sample of low income countries in Sub-Saharan Africa. Since the average duration of crises in this sample of countries is longer than one year, the predictive performance of standard binomial logit models is likely to be hampered by the so-called crisis duration bias. The bias arises from the decision to either treat crisis years after the onset of a crisis as non-crisis years or remove them altogether from the model. To overcome this potential drawback, we propose a multinomial logit approach, which is shown to improve the predictive power of our EWS compared to the binomial logit model. Our results suggest that crisis events in low income countries are associated with low economic growth, drying up of banking system liquidity and widening of foreign exchange net open positions.     

The industry effect and the decision to integrate vertically in a crisis context

ABSTRACT

The objective of this work is twofold: firstly, to study if the characteristics of the industry affect certain financial and strategic decisions of manufacturing firms and, secondly, to determine if the strategy of diversifying the activity through vertical integration generates good financial results in times of crisis, depending on the industry. To this end, an analysis is carried out with panel data from 9,523 firms in the period between 2008 and 2013. The results show that there are different strategies that firms must follow, depending on the industry to which they belong. In sectors with lower operational risk, those firms characterized by greater specificity and better product quality obtained higher profitability. However, in riskier sectors, firms with more specific assets assumed too many risks and in times of crisis have seen their profitability fall. Likewise, it is observed that the decision to integrate vertically has mitigated the weak points of each sector, allowing firms to better weather the economic–financial crisis in which this research is framed.     

美国次贷危机对国内银行经营管理的启示

该文剖析了美国次贷危机的发生及其影响．并深入分析了美国次贷危机对国内银行经营管理的启示,认为国内的银行必须关注绩效激励的逆向选择、不要懈怠贷前尽职调查、不要过分依赖第二还款来源、营销手段应适度以及不应过渡迷信风险转移等。     

Market-specific and currency-specific risk during the global financial crisis: Evidence from the interbank markets in Tokyo and London

This paper investigates how international money markets reflected credit and liquidity risk during the global financial crisis. After matching the currency denomination, we examine how the Tokyo Interbank Offered Rate (TIBOR) was synchronized with the London Interbank Offered Rate (LIBOR). We find remarkably asymmetric responses in market-specific and currency-specific risk during the crisis. The regression results suggest that market-specific credit risk increased the difference across markets, whereas liquidity risk caused the difference across currency denominations. They also support the view that liquidity shortage of the US dollar occurred in international money markets during the crisis. Coordinated central bank liquidity provisions were useful in reducing the liquidity shortage of the US dollar, but their effectiveness was asymmetric across markets.     

美国商业银行衍生品业务的特点、风险与监管改革

美国衍生品市场起步较早,既经历了繁荣阶段,也经受了金融危机的洗礼与考验,对其他国家衍生品市场发展具有较强的借鉴意义。文章回顾了美国衍生品市场发展历程及特点,剖析了与金融危机爆发有重要关联的场外衍生品市场的风险,介绍了此次美国金融监管改革法案在控制场外衍生品风险方面采取的补救措施,并就金融改革法案的最终出台与实施前景进行了展望。