Black Swan Research Articles

Pandemic highlights virtues of proper contingency planning, emergency funds

Over the last few years, one thing that has become clear is that being prepared for major challenges—both in terms of finances and limits on operations—helps a lot when unanticipated, “black swan”‐type events arise.

Repercussions of Black Swan Event on The Indian Stock Market-A Case Study of Domestic Investors

As the stock market is constantly changing and is dependent on a wide range of unpredictable variables, predicting its behaviour is one of the most difficult tasks in the time-series prediction domain. Black Swan occurrences, which are very rare but sometimes deadly, can have a significant impact on the market. The stock market, like other financial markets, is vulnerable to what are known as ‘Black Swan’ occurrences, which are sudden and unexpected yet have a profoundly detrimental effect. If the successful stock trend can be forecast, regulators and investors may improve their trading tactics, lowering investment risk while increasing profits. First, this study examines the effect of the black swan event on the stock of the listed firms in which our sample of respondents invests, and then it compares the effectof the varied risk handling of many prominent enterprises on the stock price recovery. A more rapid reaction to risk occurrences means early processing time and less vulnerability to black swans.

The impact of catastrophic events of the black swan type on the mergers and acquisitions market illustrated by the banking sector

The purpose of the publication is to identify the distinctive features of the behaviour of the merger and acquisition market in the banking sector during two catastrophic events that took place between2020 and 2023. The study includes a literature review, an analysis of previous studies on crises and their impact on the merger and acquisition market, specifically in the banking sector (desk research),as well as an analysis of selected case studies. The article poses the following research question: “Does the merger and acquisition market in the banking sector exhibit specific characteristics during andafter catastrophic events?” In order to answer this question, literature, existing research and statistical data on transactions from 2020–2022 are reviewed. Additionally, two case studies from the Europeanand US markets are analysed. The research provides an affirmative response to the research question, and the conclusions confirming the specificity of the merger and acquisition market in the bankingsector are presented in the article’s summary. The author also recommends further in-depth research on the specifics of the market for corporate control during and after catastrophic events going beyond qualitative analysis.

Exploring the drivers of supply chain sustainability: An internal and external configuration perspective

AbstractThe global supply chains sustainability and viability has been severely impacted due to the emergence of black swan events such as COVID‐19. Previous studies have examined how to enhance supply chain sustainability from a single internal capability perspective or an external relationship perspective, few studies have examined the combined effects of internal and external factors to enhance supply chain sustainability. To fill this research gap, this study investigates the multivariate relationship from internal capabilities and external relationships mutually complementary perspective to improve supply chain sustainability. Grounded on dynamic capabilities theory and relational view, we put forward the supply chain dynamic capability construct under the internal perspective, and relationship construct with supply chain members under the external perspective. Based on the configuration theory, 270 data from enterprises were analyzed using fsQCA (fuzzy set qualitative comparative analysis), and the results shows that: first, there is no necessary condition for generating high supply chain sustainability, which means that individual factors do not lead to high supply chain sustainability; second, this study identified two paths to achieve high supply chain sustainability: capability‐driven and relationship‐driven, which reflects the multiple paths and complex mechanisms to achieve high supply chain sustainability; third, this study finds the important role of supply chain dynamic reconfiguring capability in forming high supply chain sustainability. These results can provide some theoretical guidance for enterprises to improve supply chain sustainability and achieve high quality economic development.

Eco-Energetical analysis of circular economy and community-based virtual power plants (CE-cVPP): A systems engineering-engaged life cycle assessment (SE-LCA) method for sustainable renewable energy development

Amidst the escalating complexity of energy demands and climate concerns, natural calamities, and the Black Swan phenomenon have all presented formidable obstacles to the advancement and implementation of renewable energy sources. In light of the present backlog of studies in energy technology, the three primary issues identified and resolved in this study are inadequate analysis of the actual situation, absence of evidence of sustainable development, and flawed systematic methodology. This study proposes a novel renewable energy development initiative known as the circular economy and community-based virtual power plant (CE-cVPP). By integrating community participation and circular economy principles, this initiative aims to foster sustainable development and facilitate resilient progress. The principal focuses of the model are community renewable energy supply, energy demand, and community participation management. The sustainable framework is constructed upon the principles of circular economy theory. The systems engineering-based life cycle assessment (SE-LCA) method is proposed as an innovative approach to whole life cycle assessment that is grounded in systems engineering. Its purpose is to facilitate a systematic implementation and empirical evaluation of the sustainability of energy, the environment, and the economy. On the basis of disparities in renewable energy sources and a variety of spatiotemporal dimensions, CE-cVPP is categorised into four representative groups. We present a business community model for energy and environmental analysis that is based on a hospital in Harbin. The results suggest that the overall lifecycle primary energy conservation rate is 67.21%, which is an exceptional outcome that significantly promotes sustainable development in comparison to conventional methods. This improves environmental and human health protection as the full lifecycle emission reduction ratios for atmospheric pollutants are 53.50% (SO2-eq.), 51.69% (PM2.5-eq.), and 74.85% (CO2-eq.). Consideration is given to raw materials, equipment construction, equipment operation, tariffs on six pollutants, and material recycling when calculating the total cost. The annual total cost savings ratio for the full lifecycle is 54.21% when compared to the traditional system. This research possesses methodological and theoretical applicability to the energy and power sectors.

Repositioning to sink: The pricing and quality decisions for product line considering the sinking market

Opening up new markets (e.g., the sinking market) is one way to boost growth momentum, especially with the decrease in the rate of technological development and the impact of the black swan event (e.g., the COVID-19 pandemic). Considering the difficulty and cost of developing new products, repositioning existing products by a price markdown is an easier way to expand the market. Companies can implement different pricing strategies for different products to target different markets and make extra profits, but products entering the sinking market may deeply erode the original market. Therefore, balancing the advantages and disadvantages of entering the sinking market is a significant challenge for firms selling products as a product line. By building a theoretical model, we investigate the optimal product line repositioning strategy when companies decide to expand the market. First, we examine the optimal conditions for companies to enter a sinking market. We then analyze the optimal product line strategy in the sinking market. Furthermore, we investigate the interaction between repositioning strategy and quality decisions. The main results indicate that with the increase of the consumers’ willingness to pay at the sinking market and the decrease of the production cost, the seller's motivation to enter the sinking market would be greater. More importantly, entering the sinking market with higher quality can also be the optimal decision. What's more, we also find that the seller implementing low-quality repositioning strategy may prefer fiercer product erosion. Interestingly, the consideration of the quality decision would motivate the seller to enter the sinking market more aggressively even when the production cost is relatively high. Yet, this motivation would be weakened when the production cost is relatively low.

Tail-spillover effects between African currencies, bitcoin, gold and oil during two recent black swan events

Tail-spillover effects between African currencies, bitcoin, gold and oil during two recent black swan events

Assessing the Lifecycle Environmental Resilience of Urban Green Infrastructures Coping with Acute Disturbances and Chronic Stresses

Urban green infrastructure (UGI), a key component of nature-based solutions (NbSs), plays a vital role in enhancing urban resilience. Nonetheless, the absence of a thorough resilience evaluation for UGI has hindered the efficacy of its design and implementation. This article proposes an innovative urban environmental resilience index (ERI) framework designed to evaluate the lifecycle performance of UGI. First, a coupled environmental resilience evaluation system is proposed that encompasses indicators for the adaptation to acute disturbances and the mitigation of chronic pressures. Second, the inventive formulas for calculating the environmental resilience index are presented, which establish the weighting of indicators through Delphi-analytic hierarchy process (AHP) analysis, and the Storm Water Management Model (SWMM), GaBi, and i-Tree models are employed for the quantitative assessment. Third, four representative UGI scenarios in urban built-up areas have been selected for comparative analysis and in-depth discussion by calculating the resilience index. This research presents UGI solutions as adaptive measures for “Black Swan” events and “Gray Rhino” phenomena, offering significant case studies and methodological frameworks which will inform future endeavours in green and sustainable urban development.

Dynamic connectedness, portfolio performance, and hedging effectiveness of the hydrogen economy, renewable energy, equity, and commodity markets: Insights from the COVID-19 pandemic and the Russia-Ukraine war

This study employs a Time-Varying Parameter Vector Auto Regressive (TVP-VAR) connectedness approach to investigate the dynamic interconnections, portfolio performance, and hedging effectiveness across hydrogen economy, renewable energy markets, equities, and energy commodities amidst the backdrop of the COVID-19 pandemic and the Russia-Ukraine conflict. Our findings reveal a consistent level of average connectedness during both black swan events, with dynamic connectedness reaching its peak during the COVID-19 crisis. While some assets (hydrogen economy index, renewable, solar and clean technology index) persistently function as net transmitters, the others (geothermal index, crude oil, natural gas, biofuel, and gold) consistently act as net receivers. We also find that the role of equity indices (wind energy, fuel cell, FTSE_100, and S&P 500) as net transmitters or receivers changes over time. The network plot results show that the hydrogen economy typically functions as shock transmitters for equity market indices and commodities. Portfolio analysis underscores the superior risk-adjusted performance of the minimum variance (connectedness) portfolio during the COVID-19 crisis in comparison to the Russia-Ukraine conflict. Furthermore, our examination of effective hedge and portfolio strategies demonstrates that managed collateralized portfolio weights of hydrogen economy and renewable energy assets (equities) in the minimum variance portfolio increase (decrease) from 7% to 12% (53%–41%) during the COVID-19 crisis, and subsequently decline (rise) further to 6% (53%) amidst the Russia-Ukraine conflict. These findings suggest a preference for hydrogen economy and renewable energy assets as hedging instruments in health-related financial crises over crises precipitated by military conflicts.

Changing perspectives of international second home tourists towards recreational activities in Türkiye

Study Objective: This study aims to empirically analyze the impact of the COVID-19 pandemic on changes in international second residence tourists' perspective on recreational activities and their recreational experiences.Methodology/approach: An empirical qualitative perspective was adopted in the study. Online surveys were sent to a total of 500 international second residence tourists in Alanya/Turkey. Analyzes were made on the 430 response data returned.Orginality/value: Recreational areas are extremely important in the destination selection of international second home tourists’. There is a gap in studies focusing on changes in their recreational experiences during the pandemic. For the sustainability of the demand for second homes in the destination, it is necessary to follow the changes experienced during the pandemic process and to make provision for negativities. The study compares the purposes of participating in recreational activities of international second home tourists before the pandemic and during the pandemic period. It also comparatively analyzes the level of participation in indoor, outdoor and virtual recreational activities before the pandemic and during the pandemic period.Main results: Study results confirmed that the COVID-19 pandemic had an impact on the recreational activities in which second residence tourists participated.While the pandemic has reduced the interest in indoor activities, it has also increased the interest in outdoor and virtual activities significantly. Theoretical/methodological contributions: The pandemic process has not yet been fully clarified. Thus, the black swan theory remains valid for the Pandemic Process. The results of this study provide an understanding of the effects of COVID-19 specific to the experiences of international second residence tourists. The results of this study will guide the ongoing studies on second homes. Social/management contributions: In the new normal process, the demand for recreation areas has increased. Thus, carrying capacity problems arose. As a result, the destination satisfaction of international second home tourists may decrease and may decide to leave the destination. Locals who cannot use recreational areas may feel displaced. It must be taken into account that the pandemic has brought xenophobia to the agenda. Local governments should definitely make a new plan for the use of recreational areas in order to prevent possible conflicts between international second home tourists and local people.

Green bonds and traditional and emerging investments: Understanding connectedness during crises

This paper investigates dynamic connectedness between US green bonds and major implied volatility indices from stock, crude oil, gold, exchange rate and cryptocurrency markets through the application of a novel TVP-VAR frequency connectedness approach of Chatziantoniou et al. (2023) for the first time. The specific goal of this paper is to explore how uncertainty from different financial markets could affect the US green bonds during three major events that resulted in substantial financial market instability, such as the US–China trade war, the COVID-19 pandemic, and the Russia–Ukraine conflict. Firstly, there is a relatively low connectedness between green bonds and all implied volatility indices. Secondly, the degree of transmission is notably influenced by such extreme events. Thirdly, the US green bond market is a receiver of each of the analysed stock, oil, and gold markets, while it is a transmitter of exchange rate and cryptocurrency markets. Fourthly, the US green bond functioned as the primary shock transmitter for the cryptocurrency market during the COVID-19 outbreak, but it shifted to being a receiver of shocks during the Russia–Ukraine conflict. Lastly, connectedness between the green bond market and other financial markets is predominantly driven by short-term frequencies. Our results are crucial for understanding the evolution of green bonds, especially during turbulent periods, and assessing green bonds’ classification as safe assets. Such findings also show that black swan events have been deeply disruptive to the green transition, with specific relevance to policymakers and market participants.

Navigating uncharted waters: black swan events and global supply chain resilience

This paper delves into the critical realm of global supply chain management, exploring the challenges posed by black swan events—unpredictable and high-impact occurrences. In navigating these uncharted waters, the focus is on bolstering resilience to ensure the continuity and adaptability of supply chains. The study emphasizes proactive risk assessment and scenario planning, advocating for diversification, redundancy, and the integration of technology. Collaboration, agile supply chain practices, and resilient financial planning are deemed pivotal, along with a commitment to regulatory compliance and employee well-being. The pursuit of continuous improvement and the optimization of global networks round out a comprehensive strategy to fortify supply chains against the unforeseen disruptions that characterize the contemporary business landscape.

Be Yourself: Permission to the Driver ”Be Perfect” with the Help of Cinema

Description of the driver “Be perfect” based on the concept of Taibi Kahler on the example of film characters who have become hostages of their life script, in which one of the fundamental elements is this driver. In particular, the author proposes to look at the main characters of the films «Black Swan» (dir. Darren Aronofsky, 2010), «Whiplash» (dir. Damien Сhazell, 2013) and «The Novice» (dir. Lauren Hadaway, 2021). The author discusses whether it is possible to get out from under the influence of the driver and offers a solution that can also be gleaned from the stories of the heroes of other films, using the example of the film “Flashdance” (dir. Adrian Line, 1983), as well as literary works and the play by Evgeny Grishkovets.

Supply chain driven herding behavior during COVID-19: evidence of interdependence from India

PurposeThis study aims to test the market anomaly of herding behavior driven by the response to supply chain disruptions in extreme market conditions such as those observed during COVID-19. The authors empirically test the response of the capital market participants for B2B firms, resulting in herding behavior.Design/methodology/approachUsing the event study approach based on the market model, the authors test the impact of supply chain disruptions and resultant herding behavior across six sectors and among different B2B firms. The authors used cumulative average abnormal returns (CAAR) and cross-sectional absolute deviation (CSAD) to examine the significance of herding behavior across sectors.FindingsThe event study results show a significant effect of COVID-19 due to supply chain disruptions across specific sectors. Herding was detected across the automotive and pharmaceutical sectors. The authors also provide evidence of sector-specific disruption impact and herding behavior based on the black swan event and social learning theory.Originality/valueThe authors examine the impact of COVID-19 on herding in the stock market of an emerging economy due to extreme market conditions. This is one of the first studies analyzing lockdown-driven supply chain disruptions and subsequent sector-specific herding behavior. Investors and regulators should take sector-specific responses that are sophisticated during extreme market conditions, such as a pandemic, and update their responses as the situation unfolds.

A transdisciplinary approach of the energy security in Eastern Europe in the context of the Russian-Ukrainian war

The present paper analyzes the biggest crisis associated with a globally extended period of instability and insecurity. In the context of the Russian-Ukrainian war as a geopolitical problem, climate change and the global energy crisis are the straws that broke the camel’s back – especially in Eastern Europe – regarding the political decision to begin transitioning from a dependence on fossil fuels to renewable energy and/or decarbonization. Consequently, there is a need for diversification of the energetic resources. The big dilemma of these aspects remains the quality of the energetic resources, especially of nuclear energy, which seems to be the ,,Holy Grail” of decarbonization, and energy source distribution, so to be used in combination with renewable sources of energy. Besides the possible disadvantages, wind and solar energy require reliable storage of electricity on a large scale, which causes it to become extremely expensive. The paper presents a very optimistic perspective on the energetic analysis of the long-term trend for energy consumption and generation, as a case of the big players in carbon emission searching for the black swan of energy.

Institutional resilience and disaster governance: How countries respond to Black Swan events

In a worldwide hazard environment exacerbated by the effects of climate change and the increasing interconnectedness of built and social systems, disasters are becoming more frequent, more destructive, and locally more variegated. Yet some communities are more disaster resilient than others. What explains this? This study employs institutional resilience as a lens through which to compare the responses to large-scale disasters taken by Australia, Japan, and The Netherlands, three affluent democracies with distinctive institutional arrangements. In so doing, we use the Swan Matrix as a yardstick for gauging the adaptive capacity of different systems of disaster governance. By focusing on human efforts to build resilience, we draw attention to contextual factors, particularly the type of institutional arrangement, which, our observations suggest, shape disaster governance. We conclude with a call for further comparative research into the major disaster governance systems in a hazard environment in which large-scale disasters are becoming commonplace.

Digital loans and buy now pay later from LendTech versus bank loans in the era of ‘black swans’: Complementarity in the area of consumer financing

Research background: People who take non-banking loans are primarily perceived as excluded from accessing bank services. The growth of e-commerce and the increasing digitalisation of customer interactions with banks was particularly accelerated by the COVID-19 pandemic (the first ‘black swan’). These processes have also influenced the rapid growth of the LendTech (LT) sector within FinTech with its digital loans and buy-now-pay-later (BNPL) services. The war in Ukraine (the second ‘black swan’) has led to an energy crisis, increased inflation, interest rates and credit costs, and reduced credit accessibility. In this context, the following research questions are addressed: Are the LT and banking sectors complementary or substitutive in the area of consumer financing? Does complementarity apply to all customer segments and loan amounts? How does the extent of complementarity or substitutability of the LT sector depend on, and to what extent do changes in the regulatory and macroeconomic environment affect, the interaction between the banking and LT sectors? Purpose of the article: The aim of the article is to identify trends in the LT sector within FinTech in the context of assessing the scale and determinants of current and future complementarity of the non-bank sector and the banking sector in the area of consumer credit in time of black swans. An additional purpose of the article is to estimate revenues from the basic operating activities of companies from the on-line channel. Methods: The research process was multi-stage and the research procedure was structured. Due to the lack of a uniform source of data on LT products and services, the study used many data sources — data from the Credit Information Bureau, a primary nationwide survey on LT users a primary survey of people representing LT's managerial staff. The selection of LTs was carried out according to the concept of the monetary sampling unit. The Horvitz-Thompson estimator with Sen‐Yates‐Grundy variance form was used to estimate net operating income for LT from the online channel in 2021. Findings & value added: The LT companies surveyed state that black swans (the COVID-19 pandemic and the war in Ukraine) and the current macroeconomic situation have not significantly affected demand for non-banking loans. The reduction in the opportunities for the LT sector as a result of anti-usury regulations will only lead to a shift in consumer demand to the pawnshop sector and the shadow economy, which will be detrimental to consumers. Complementarity between LT and the banking sector is revealed especially in crisis situations, thus limiting the effects of market shock (limited supply of loans offered by banks). In periods of stabilisation, a rather clear division of preferences is noticeable – in the case of seniors and loans for higher amounts, banks dominate, while in the case of lower amounts and in younger age groups, non-bank institutions are more popular. The mechanism by which shrinking banking services are replaced by LT in short-term crises confirms the importance of LT in balancing the Consumer Finance market in the face of unstable periods. From a medium- and long-term perspective, it should be noted that inflation and rising interest rates will increase the scale of credit exclusion in commercial banks, shifting part of the demand to the non-bank sector. These phenomena have an international dimension. Similar observations were made already in 2012 by the CFPB in the USA and the British FTA, when analysing the consumer finance market immediately after the subprime crisis, emphasising the effects of limiting access to bank consumer loans and the resulting growth of the LT market (Gębski, 2013).

On the slow–fast dynamics of a tri‐trophic food chain model with fear and Allee effects

A three‐species food chain model with Allee and fear effects on both prey and predator is investigated in this work. The model consists of ODEs describing the evolution and interaction of prey, predator, and top predator populations in a biological system. We assume that the intrinsic growth rate of the prey is much smaller than a threshold value determined by other biological parameters of the model. Consequently, the model is transformed into a singularly perturbed system that acts on two different time scales, ranging from slow for both prey and predator to fast for the top predator. Positivity and boundedness of the solutions of the model along with the stability for its equilibria are investigated. The model possesses the exact invariant manifold with changing stability (black swan) and exhibits the canard phenomenon. Some numerical simulations are performed to validate our analysis.

The Impact of "Black Swan" Events on Oil and the European Capital Markets

The Impact of "Black Swan" Events on Oil and the European Capital Markets

Integrating three theories of 21st-century capitalism

Purpose This study aims to help develop “business principles for stakeholder capitalism” in two steps. First, the study defines internal logic of three theories of capitalism and two variants within each theory. Second, it examines approaches to integration into modern democratic capitalism. Treating the three theories as substitutes identifies relative strengths and weaknesses; complementarity and partial overlap approaches to integration study the institutional settings within which stakeholder capitalism operates. Empirical outcomes reflect competition between market and stakeholder businesses for participants, with institutional conditions determining the scope of collective action. Design/methodology/approach The approach aligns three typologies in a unique conceptual arrangement defining the three theories of capitalism: forms of capitalism, potential failures of each form and associated types of goods. The first method examines the internal logic of each theory of capitalism. The second draws on traditional narrative review of references documenting each theory of capitalism and variants together with modern Marxist anti-capitalism. Findings Three typologies align uniquely with the theories of capitalism, each having two variants. Both variants of stakeholder capitalism are compatible with compassionate capitalism, constitutional government or polycentric governance but not with self-interest capitalism, dictatorship or Marxism. A theory of modern democratic capitalism allocates roles for private, club and social goods with empirically variable mixes occurring across countries. Competition among different types of enterprises provides an empirical test for comparative advantages of stakeholder capitalism. Future research should consider approaches for testing the proposed conceptual scheme in practice concerning capacity to deal with grand challenges, wicked problems and black swan events. Research limitations/implications Research approach is limited to logical examination of theories and literature documentation without direct empirical confirmation. The study does not address practical implications for managers and public officials or social implications concerning private incentives, stakeholder cooperation or collective action. Originality/value Originality lies in shifting terms of debate about stakeholder capitalism from advocacy of substitute theories to understanding of its relationship to market capitalism and collective action capitalism. Value lies in explaining desirability of theoretical integration of three types of capitalism into a comprehensive framework for modern democratic capitalism.