Contagion Effects Research Articles

Taking advantage of the fire: Does firm performance feedback have a supply chain contagion effect?

The increased interconnection among supply chain participants brought about by globalization has made supply chain management more crucial than ever for gaining a competitive advantage. We examine how supply chain participants respond to feedback on firm performance, with a focus on the effect of contagion on bargaining power. When a company's performance is below expectations, suppliers and customers tend to increase their bargaining power and potentially take actions to safeguard their interests. This is attributed to the decline in the focal company's product market power, resulting from negative performance feedback. Contrarily, positive performance feedback does not cause significant changes in the bargaining power of supply chain firms. Moreover, we explore the role of other stakeholders, such as creditors and investors, in influencing supply chain negotiations. The distrust of other stakeholders leads to the further improvement of the bargaining power of supply chain companies. We analyze the motivation of supply chain stakeholders to improve their bargaining power under performance feedback and develop a complete causal chain and solution on how to enhance future performance prediction to lessen the increase in bargaining power of the supply chain. This paper is both a valuable contribution to the body of knowledge on the financial impacts of business stakeholder decision-making and a cautionary tale for companies that urgently need to cluster their supply chain activities.

Does Geopolitical Risk Matter for Cross‐Industry Risk Contagion: The Roles of Real Linkage and Information Channels*

AbstractUsing data from 34 Chinese industries from January 2007 to February 2024, we examine risk spillover in the economic system and the channels through which geopolitical risk (GPR) influences contagion effects. Risk spillover measurements are calculated for both the short and long term by combining variational mode decomposition with the variance decomposition of vector autoregression. Our findings provide evidence of significant and time‐varying spillovers among industries over time. The results on densities and assortativity coefficients indicate the presence of structural changes in the risk network during geopolitical crises. Furthermore, we find that the real linkage (input–output nexus) is an important determinant of long‐term spillovers during periods of high GPR, and the information channel (market sentiment) is associated with risk contagion caused by GPR in both the short and long term. Overall, this paper offers valuable insights to prevent and mitigate the negative consequences triggered by geopolitical events on the stability of the economic system.

Quantile connectedness and network among Green bonds, Renewable Energy, and G7 sustainability markets

This paper examines the quantile spillovers and interconnectedness between green bonds, renewable energy, and the G7 sustainability markets under extreme market conditions. It reaches beyond the widely employed studies based in the mean values of variables by resorting to the advanced quantile vector auto-regression methodology. The results show that the overall connectedness is stronger during extreme, either bearish or bullish market situations, than during normal market conditions. Furthermore, we show that all sustainability markets, except Japan, are the net transmitters of shocks, while all the green bonds are the net receivers. Moreover, we document that spillovers vary significantly over time and that extreme market conditions reduce the net spillover influences. The relative tail dependence analysis shows that the connectedness at the lower quantile relatively dominates the connectedness at the upper quantile. Finally, the total spillovers are higher at the extremes than at the median quantile, whereas the periods of major crises are associated with unusually high connectedness, as consistent with the literature on contagion effects.

Exploring how and why a sports-based multi-component intervention works for disengaged students: a longitudinal realist evaluation

ABSTRACT School dropout is associated with numerous detrimental consequences including prolonged unemployment, poverty, a wide range of psychological and physical health problems, and premature mortality. As such, designing and implementing interventions to prevent school dropout and ensure successful school completion is crucial. The purpose of the current study was to conduct a longitudinal realist evaluation to understand how, and under which circumstances, a multi-component intervention delivered through the charitable foundation of a professional sports team may impact the developmental outcomes of disengaged students. The intervention comprised one-to-one mentoring, classroom-based learning, sport and physical activity. Participant observations and fifty-two interviews were conducted with teachers and students over a ten-month period to form context-mechanism-outcome configurations (CMOCs) and to refine initial programme theories. The CMOCs developed highlighted the importance of students developing healthy conflict resolution skills and emotional regulation strategies, the potential of sporting content to re-ignite interest in academic learning, the powerful effects of deviant peer contagion, the synergistic impact of a multi-component intervention, and the role of pre-existing and ongoing contextual factors in determining whether interventions can create sustainable and lasting desirable outcomes among students. The findings provide practical recommendations for future sport-framed intervention design, implementation, and evaluation.

Social contagions in business resilience: Evidence from the U.S. restaurant industry in the COVID-19 pandemic

The unprecedented COVID-19 has led to the collapse of numerous businesses, notably within the tourism and hospitality sectors. Despite the burgeoning research on resilience, few studies have embraced a theoretical lens, particularly from a social network perspective. In addition, most extant resilience studies have not explicitly considered the geographic accessibility prerequisite inherent to tourism and hospitality products. In this study, leveraging the social contagion theory, we present a holistic research framework to investigate the influence of geographic and social proximities, two pivotal social contagion mechanisms, on business resilience. We also delve into moderating factors to discern the conditions under which contagion effects are amplified or attenuated. To validate our theoretical model, we select the restaurant industry as our research context, given its severe impact from COVID-19. Utilizing an extensive dataset from Yelp, encompassing ten U.S. cities varying in sizes and geolocations, our findings indicate that both geographic and social influences exert significant direct effects on resilience. Additionally, these effects exhibit considerable variations contingent upon product attributes, customer characteristics, and geographic factors. Theoretically, we are the first to substantiate the role of social contagion theory in examining resilience, enriching our understanding of the social network mechanism of behavioral contagion among customers during the COVID-19 pandemic. We also offer valuable practical implications for various stakeholders in supporting their management strategies and decision-making in developing effective plans and preparations, minimizing adverse impacts, and ensuring sustainability in the face of future disruptions.

Beyond Sanctions: ECOWAS and the Resurgence of Military Coups in West Africa

The recent resurgence of military coup d’etat in the West African region is alarming and problematic because of its contagion effect. Since 2019, Chad, Mali, Guinea, Burkina Faso and Niger have experienced military coup d’etat. As part of the efforts aimed at reversing military coups in these States, ECOWAS’ swift response has been in the form of sanctions, which include economic blockade, movement restrictions for the coup leaders, severance of diplomatic relations, and suspension of military leaders from the international community, among others. This effort has neither deterred the coup leaders nor hastened the return to civil rule. This paper attempts to examine ECOWAS’ responsibility beyond the imposition of sanctions in the era of resurgent coups in West Africa. The paper adopts the qualitative method of data collection using secondary sources, which include published books, journals, resolutions, and proceedings of ECOWAS. The paper argues that while ECOWAS is performing its moral obligation by imposing sanctions, the organisation lacks the capacity to compel West African leaders in the entrenchment of good governance. It, however, concludes that ECOWAS needs to re-strategize by having a potent framework capable of deepening good governance and stability of democracy in West Africa.

Asymmetric TVP-VAR connectedness between highly traded commodities and hedging strategies: Evidence from major contagions

The objective of this study is to examine the return interconnectedness and asymmetric spillover effects in global commodity futures markets, with a focus on the impact of contagion. A competent asymmetric time-varying parameter vector autoregressive (TVP-VAR) model was employed for highly traded commodity futures (cocoa, coffee, corn, cotton, soy, sugar, wheat, and oil) between January 1, 2000, and March 31, 2024. This study investigates the connectedness of commodities in three dimensions: asymmetric spillovers, the influence of oil and oil substitutes on the network, and the impact of major contagions. The average total connectedness index (TCI) indicates that the connectedness is significant throughout the period and increases during the invasion. The findings imply that contagion effects trigger a potential alteration in the structure of the network integration level of the commodities, amplifying system-wide dynamic connectivity due to disurptions caused by oil and oil substitutes. The net plot depicts corn and soy as the net transmitters, with their magnitude increasing during the contagions. The pairwise connectedness index (PCI) revealed that corn-soy, corn‒wheat, and soy-wheat were the primary interactors, while oil became a significant interactor, particularly during the oil crash and the COVID-19 outbreak. Additionally, compared with other contagions, GFC had a potential asymmetric effect on the network. Positive returns dominate the interaction between the primary transmitter and receivers, whereas negative returns do not significantly dominate the total network. These investigations contribute to the literature on the food-fuel nexus in terms of asymmetries and the impact of contagions on the futures market. It also identified the optimal portfolio allocation based on the hedging effectiveness of three portfolio construction strategies.

Can customer ESG performance improve corporate carbon emission productivity? --An empirical study from listed companies in China

<p _msthash="773" _msttexthash="14882050313"><span style="font-size:12pt"><span style="text-justify:inter-ideograph"><span style="line-height:200%"><span style="font-family:"Times New Roman",serif">With the increasing awareness of sustainable development, the ESG performance has become a focal point for both companies and their stakeholders. This study, Chinese A-share listed companies as an example, constructs a sample of paired enterprises and customers to examine the impact of customer ESG performance on corporate carbon productivity and its underlying mechanisms. The research demonstrates a positive relationship between customer ESG performance and corporate carbon productivity, indicating the presence of a supply chain contagion effect. In terms of influencing mechanisms, customer ESG performance primarily enhances corporate carbon productivity by increasing pollution control investments and improving gross domestic product. Further investigation reveals that the improvement in customer ESG performance has a more significant impact on corporate carbon productivity when the company is larger in scale, operates in less-polluting industries, and engages in export activities. This study enriches the relevant research on corporate carbon productivity from an external partner perspective and provides valuable insights for supply chain enterprises on how to enhance carbon productivity and sustainable competitive advantage.</span></span></span></span></p>

Financial contagion in cryptocurrency exchanges: Evidence from the FTT collapse

To what extent does the collapse of a digital token spread contagion across cryptocurrency markets? How do markets incorporate information in this turbulent setting? We examine contagion effects across major digital exchanges during the collapse of the FTX exchange and its token, FTT. We find evidence of contagion across crypto exchanges. We also examine the information cascade effects of other crypto assets on FTX when nearly all withdrawals were prohibited. We find abnormal returns for major assets, indicating a flight to safety from less to more authoritative digital assets. The implications for traders, exchanges, and policymakers are discussed.

The Role of Governance in Mitigating the Effect of Financial Contagion on Bank Bankruptcies: An Empirical Study of ASEAN Banks

The Role of Governance in Mitigating the Effect of Financial Contagion on Bank Bankruptcies: An Empirical Study of ASEAN Banks

Happiness contagion in China's cities: Who gets more happiness from urban communities?

AbstractWhile emotional transmission is a well‐documented phenomenon, the contagion of happiness, specifically as a positive emotion, has received limited research attention. This study utilizes data from the 2015 Chinese General Social Survey (CGSS2015) to analyse the effects of happiness contagion among different individual groups in urban communities. Findings indicate that individuals with positive personalities and social attitudes are more susceptible to happiness contagion. Regarding personal and job attributes, the elderly, the highly educated, the married, or people who are religious, have high incomes, work in non‐state‐owned enterprises, or work flexibly tend to receive more happiness from their neighbours. Moreover, residents living in economically developed areas exhibit a greater receptivity to happiness contagion. The paper discusses policy implications of the results. Please refer to the Supplementary Material section to find this article's Community and Social Impact Statement.

Herding behaviour towards high order systematic risks and the contagion Effect—Evidence from BRICS stock markets

This paper investigates the existence of herding movements towards several systematic risk factors derived from the Capital Asset Pricing Model (CAPM) and its extensions. The measure of herding is estimated using the dispersion of the risk factor loadings. The state space model is employed to extract time series of herding dynamics. We empirically survey the herding behaviors in the BRICS stock markets (i.e., Brazil, Russia, India, China, and South Africa) using monthly stock index data from 2006 to 2022, and identify various herding patterns towards specific factors. We also examine the impact of unanticipated shocks in crucial macroeconomic variables on the degree of herding measure in these countries. Lastly, we test the contagion hypothesis of herding across markets using correlation analysis. The results show that the level of herding linkages increases significantly in periods of market stress, casting doubt on the effectiveness of asset allocation in these markets for the sake of diversity.

Contagious Stock Price Crashes Along the Supply Chain

Although risk management is widely regarded as an important topic within supply chain (SC) management, little research studies the contagious effect of risk factors along SC networks. By using stock price crashes as an indicator of risk factors, our study reveals that stock price crash risk can be transmitted from major customers to suppliers with a delay of up to two weeks. We show that the information opacity of suppliers is a factor that potentially contributes to the delayed crash contagion. We also find that the contagion effect becomes more pronounced as the importance of customers increases. Moreover, customer operational incidents have a more pronounced contagion effect on suppliers compared to customer financial incidents. Additionally, we find that suppliers tend to take strategic measures following the stock price crashes of their major customers, including diversifying their customer base, enhancing operational efficiency, and improving product quality. However, among these actions, only the improvement of operational efficiency effectively mitigates the adverse impact of customer stock price crashes on suppliers. Overall, our findings provide new insight into the distribution of risk factors across SC networks, highlighting the critical role of operational improvements in bolstering the resilience of firms to SC risks.

LGBTQI Rights crucified in Indonesia? New Penal Code anti missio Dei?

Literature continues to document the ways in which Lesbian, Gay, Bisexual, Transgender and Questioning (LGBTQI) communities continue to grapple with or face unprecedented abuse in many nations of the world. Members of LGBTQI groups are reported to face discrimination and legal obstacles in countries like Indonesia, since its socio-cultural norms acquiescently discourage homosexuality or gender transitioning in any form. Furthermore, recent amendments to Indonesia's Penal Code, which contain provisions that may endanger the lives and safety of LGBTQI communities in unprecedented ways, have shown that such norms, if relentlessly upheld, strongly influences the direction of public policy. In light of such harmful provisions, one could argue that the rights of the LGBTQI community in Indonesia are being slowly but agonizingly crucified, perhaps analogous to the crucifixion of Jesus Christ. The primary proponents of this symbolic crucifixion, who conceal their intentions behind legislative modifications, seem to be politically motivated Islamic religious conservatives who publicly oppose LGBTQI rights. In light of these occurrences, this paper employs the Missio Politica framework and literature reviews to investigate the new Indonesian Penal Code and assess whether or not it violates the internationally acknowledged rights of the LGBTQI community. Drawing from literary works, it uses the term "crucifixion" in a metaphorical manner to emphasize the radical ways in which Islamic conservatism has violated LGBTQI rights over the years, and how these violations are now being formalized through Indonesia's new penal code. To be clear, this paper's accusations are not directed against Islamic teachings per se, but rather against intolerant Islamic conservatives who view LGBTQI preferences as ‘crucifiable’ sin and advocate for change of state laws to reflect such harmful sentiments. Overall, it is argued that certain sections of the recently enacted Indonesian Penal Code not only offend the LGBTQI community, but also undermine the redemptive goals of missio Dei in that country while having global contagion effects. The scope of this paper requires more research as not as much has been done to assess how certain recently enacted provisions of the Indonesian Penal Code impact LGBTQI rights in the context of fulfilling the redemptive goals of the missio Dei.

EUROPEAN FINANCIAL MARKETS EXPOSED TO EXOGENOUS SHOCKS: COMMUNICATION DYNAMICS AMONG INVESTORS AND TECH MODELS TO DETECT FINANCIAL CONTAGION

Brexit, the Covid Pandemic and the Russia-Ukraine War represent the latest three major global events that have demonstrated that financial contagion is a phenomenon that needs careful study because its global effects can cause unprecedented shocks to regional and global financial markets. The main reason is related to the interconnectedness of these markets, the interdependence between countries, and the connections created over decades between national and international financial institutions. In this paper, we aim to analyze, using the Diebold-Yilmaz (DY) methodology proposed by Diebold and Yilmaz in 2014, the effects of financial contagion in the three major crises Brexit, Covid and the Russia-Ukraine war (first year). Financial contagion is primarily a fear-driven phenomenon. Financial network connectivity has the potential to change due to investors' fear during events that are disturbing and cause exogenous turbulence. We use the network analysis established by Diebold and Yilmaz (2014) to study how SCDS (Credit Default Sovereign Markets) markets changed their interconnectedness around exogenous shocks in the last decade (Brexit, the Covid-19 pandemic, and the Russian invasion of Ukraine).

Contagious greenwashing investment

PurposeThis study explores the contagion of greenwashing strategies among ESG mutual funds. It investigates how the greenwashing behaviors of peer funds within the same family influence a fund’s decision to engage in greenwashing. The research also examines the impact of greenwashing on genuine ESG funds and explores the mechanisms through which greenwashing strategies spread across ESG mutual funds.Design/methodology/approachThis paper employs a two-stage least squares regression model with cross-fund returns standard deviation as an instrumental variable to disentangle the peer effects of greenwashing from family-level characteristics. The analysis incorporates various fund characteristics and introduces four contagion channels through which greenwashing may influence genuine ESG funds.FindingsThe study finds greenwashing behavior in ESG funds is positively influenced by similar practices within their fund family. Larger assets under management and older funds with higher management fees show resilience against greenwashing influences, while team-managed funds are more susceptible. Additionally, socially responsible investors struggle to distinguish between genuine and greenwashing ESG funds, which may contribute to the persistence of greenwashing practices.Originality/valueThis paper contributes to the literature by delineating the mechanisms of greenwashing contagion within ESG mutual funds. It also examines the demand-side incentives for adopting greenwashing strategies, offering insights into the implications for fund flows and investor behavior. This study is among the first to analyze the contagion effects of greenwashing strategies across an extensive network of ESG funds, enriching our understanding of the broader impacts of greenwashing in the context of socially responsible investing.

Anatomy of Financial Crises: Periodization and Causes

Financial crises have a significant impact on the global economy, leading to recessions, increased unemployment rates, and other negative consequences. Deep understanding of the mechanisms of origin and development of financial crises is necessary to enhance the resilience of economic systems. The aim of this article is to study financial crises in terms of their periodization and the systematization of their causes. The study employed methods such as analysis, systematization, and historical methodology to analyze and periodize financial crises during the transitional period from the late 20th century to the early 21st century; comparison, analogies, and systematization to generalize the causes of financial crises; and a logical-consequential method to draw conclusions based on the conducted research. The article explores the specific manifestations of financial crises in the global economy and summarizes their periodization. Systemic determinants of global financial crises are examined. The distinguishing features of banking and currency crises are characterized. The sequence of the development of financial crises in a state based on the "contagion effect" is considered. It is proven that financial crises are not random events; they are caused by various factors, including speculative operations, a lack of regulation and oversight, and excessive lending. Special attention is given to geopolitical factors as one of the most common causes of financial crises in recent decades and to their specific manifestations. It is established that, despite the cyclical nature of financial crises, their scales and consequences always vary, necessitating the development of dynamic tools for crisis management. The research aims to identify patterns and factors that cause financial crises. The results can serve as a basis for developing a system of indicators to predict the likelihood of financial crises, enabling timely preventive measures to prevent or mitigate possible negative consequences. Developing such a system is a complex and comprehensive task that presents prospects for further research. The type of article is theoretical.

Norm violations and behavioral spillovers—Evidence from the lab and the field

This paper explores the contagion effects of norm-violating behavior across decision situations. Through a series of laboratory and field experiments, we empirically establish the conditions under which norm-breaking behavior in one decision situation leads individuals who observe this to violate norms in other, distinct decision situations. Our laboratory findings show that these spillover effects are more pronounced when the norms underlying the decision situations are perceived to be similar. However, spillovers can also affect decision situations governed by relatively dissimilar norms if the observers of norm violations have had the opportunity to first violate the same norm as the observed violator themselves. In an accompanying field experiment, we underscore the economic importance of norm similarity for spillover effects. When workers are exposed to information about celebrities evading taxes, they exhibit significantly higher rates of workplace theft than those in the control group, yet this exposure does not negatively affect work morale.

The Spatial Scale and Spread of Child Victimization.

Previous research shows that large, densely populated urban areas have higher rates of child victimization that have persisted over time. However, few investigations have inquired about the processes that produce and sustain hot and cold spots of child victimization. As a result, the mechanisms that produce the observed spatial clustering of child victimization, and hence "why" harms against children tend to cluster in space, remains unknown. Does the likelihood of being a victim of violence in one location depend on a similar event happening in a nearby location within a specified timeframe? Rather, are child victims of violence more likely to reside in suboptimal neighborhood conditions? This paper aims to present an analytical and theoretical framework for distinguishing between these locational (point) processes to determine whether the empirical spatial patterns undergirding child victimization are more reflective of the "spread" via contagion (i.e., dependency) or whether they are produced by neighborhood structural inequality resulting from spatial heterogeneity. To detect spatial dependence, we applied the inhomogeneous K-function to Los Angeles Medical Examiner data on child homicide victim locations while controlling for regional differences in victimization events (i.e., heterogeneity). Our analysis found strong evidence of spatial clustering in child victimization at small spatial scales but inhibition at larger scales. We further found limited support for the spatiotemporal clustering of child victimization indicative of a contagion effect. Overall, our results support the role of neighborhood structural vulnerability in the underlying mechanisms producing patterns of child victimization across Los Angeles County. We conclude by discussing the policy implications for understanding this spatial patterning in geographical context and for developing effective and targeted preventive interventions.

Higher-order contagion effects in Russian fuel export markets: Evidence from COVID-19 pandemic and Russia-Ukraine war

This study investigates the transmission of financial contagion from energy markets, specifically focusing on Brent oil and natural gas, to the stock indices of 13 countries highly dependent on Russian fuel exports. The analysis encompasses two major crises: the COVID-19 pandemic and the 2022 Russia-Ukraine conflict. By employing six distinct second- and higher-order co-moment contagion tests, our findings reveal notable dynamics: 1) Both the COVID-19 pandemic and the Russia-Ukraine conflict exhibit significant evidence of contagion. 2) During the pandemic, Brent oil plays a more prominent role in transmitting contagion across different stock markets. In contrast, natural gas serves as the primary transmitter for Russian-Ukraine war. 3) Among the three regions analyzed, Asian countries demonstrate resilience against contagion in both crises, while European countries experience a substantial impact from the contagion. 4) Higher-order co-moment channels are more dominant in driving contagion than second-order co-moments. These empirical findings emphasize the importance of considering higher-order co-moments in elucidating the dynamics of financial contagion. They provide valuable insights for policymakers and decision-makers, aiding in the formulation of effective strategies and policies.