Financial Crisis Research Articles

Connectedness and Shock Propagation in South African Equity Sectors during Extreme Market Conditions

This study examined the connectedness and propagation of risk in the South African equity sectors during the Global Financial Crisis (GFC), the European Debt Crisis (EDC), the US–China trade war, and the COVID-19 pandemic. Daily returns of nine Johannesburg Stock Exchange (JSE) super sectors were examined from 3 January 2006 to 31 December 2021. Applying the connectedness matrix and time-varying parameter vector autoregressive (TVP-VAR) model, in full sample and sub-periods, the study showed that dynamic total connectedness of the super sectors is high in absolute form (62%). Furthermore, it was found that the highest volatility connectedness was during the EDC (68.83%) and during the COVID-19 pandemic (68.57%), followed by the GFC (63.16%) and lastly the US–China trade war (42.09%), respectively. This suggests that the tendency for a systemic risk is highest during the EDC, COVID-19, and GFC periods, and lowest during the US–China trade war. The financial sector was the primary net-transmitter of shocks during the COVID-19 period, while the automobile and parts sector was the strongest net-transmitter of shocks during the GFC, EDC, and US–China trade war. Similarly, the strongest net recipient of shocks during GFC, EDC, and COVID-19 is the chemical super sector. The study concludes that there is a significant volatility connectedness among JSE super sectors. In addition, the JSE super sectors exhibit time-varying connectedness during extreme events. Moreover, the net-transmitter and net-receiver of shock do not change significantly during different crisis periods. The policy implications of the findings are highlighted in the concluding section.

A Bibliometric Analysis on the Topic of Social Policy

Social policy relates to a variety of social phenomena. Over recent decades, it has attracted the interest of scholars from a variety of academic disciplines as well as that of national and international organizations. This study applied the bibliometric approach to identify and analyse articles present in the Web of Science database, published in the English language, containing the term social policy in the title, abstract, or author keywords. Bibliometric networks and analyses were conducted using bibliometrix and VOSviewer software. The results show that the publication trend of articles on social policy varied over time and in association with social phenomena; for instance, an increase in publications occurred in the wake of the 2008 financial crisis. COVID-19, environmental issues, migration, and austerity were the main social policy topics being addressed in more recent investigations. This paper advances our knowledge about the research trends on the topic of social policy. This analysis included all articles published until the end of 2023 and can thus be considered to be up to date at the time of publication. It highlights the latest topics social policy has become interested in and the range of research disciplines it is associated with.

The Painful Double-Knock on Food Prices: 2008 Financial Crises and COVID-19 Pandemic

Food supply and demand chains are susceptible to global shocks. Unstable and sudden food price hikes cause serious malnutrition problems and increase the number of food-insecure people, especially in developing countries. Using the FAO Food Price Index (FFPI), this study makes one of the first attempts to utilize monthly observations of the FFPI in dynamic time series ARDL and ARX settings to identify the effects of food prices on COVID-19 infection rates and the 2008 global financial crisis. Our empirical findings confirm that the financial crisis significantly increased the FFPI, although its effects decreased as markets equilibrated between 2007 and 2009. The pandemic has had a mild impact on food prices in the short run compared to the 2008 crisis, but in the long run, the COVID-19 outbreak has a larger impact, with 1 million new COVID-19 infections associated with an increase of between 0.0464 and 0.0509 points in the FFPI. Food price volatility and hikes, even if short-term, increase poverty, malnutrition, and food insecurity, foster social unrest, and lower people’s living standards. This research implies that food prices are globally sensitive to both pandemics and financial crises, and the severity of the pandemic can drive global food prices higher, depending on the number of infections. Over the long run, the impact of the outbreak surpasses that of the financial crisis. The latter tends to have a major impact on food prices in the short run but subsequently declines as markets begin to equilibrate, reflecting asymmetries between the two phenomena in their effects on food prices. Overall, the results indicate that the financial crisis and the COVID-19 pandemic had a short-run, immediate, augmenting impact on food prices. However, while the 2008 crisis affected the supply side only, COVID-19 had impacts on both the demand and supply sides.

Capturing the voices of working Arab mothers during the COVID-19 pandemic: A quick content analysis of their messages on Twitter (X)

Introduction: Working mothers from different cultures have been heavily challenged during the different phases of the COVID-19 pandemic. Infectious disease outbreaks increase women’s missions, which challenge their abilities to balance time among the different tasks. The purpose of this study was to capture the voices of working Arab mothers through their posts on Twitter to explore the challenges they faced during the COVID-19 pandemic. We aimed to understand how working Arab women’s lives were affected and how the pandemic’s burden interacted with existing challenges in Arab women’s lives, such as gender hierarchies and patriarchal social structure. Methodology: Arab mothers’ posts on Twitter during the first 3 months of the pandemic (March–June 2020) were extracted manually. The search strategy followed included a combination of terms searched in Arabic, with each keyword being searched separately with one of the fixed terms (COVID-19 or Corona) in the search engine. Keywords searched for are work, mother/s, worker/s, working mothers, children, kids, husband, online teaching, cleaning, tired, pressure, and home chores. Only 40 posts were relevant and included in the current study. Conventional content analysis was followed to analyze the mothers’ posts on Twitter. Results: The findings showed that these mothers struggled to manage family, household, and children’s online learning (N = 14); work from home and/or be at the worksite (N = 12); the negative consequences on mental and social wellbeing (N = 17); and the financial crises during the pandemic (N = 4). They were disappointed with the insufficient support provided by husbands (N = 2) and the government’s response in addressing their needs as working mothers during the pandemic (N = 7). Conclusion: Recognizing the extent to which disease outbreaks affect women is a fundamental step to understanding the effects of health emergencies on them and creating effective policies and interventions. Public health policies, measures, and media are needed to promote better self-care for families, especially mothers, to avoid future tensions in the healthcare system during and after the pandemic.

Navigating crises: Gold's role as a safe haven for U.S. sectors

This paper investigates the correlation between U.S. sectors and gold, and whether gold can serve as a safe haven for investors in specific U.S. sectors during the global financial crisis, COVID-19, and the Russia-Ukraine war. We use data from the Standard & Poor's Depository Receipts (SPDR) Select Sector Exchange Traded Fund (ETF) to capture the performance of the respective sectors. Our findings document that gold is a weak safe haven for most U.S. sectors. Gold is not a safe investment for energy, materials, utilities, and consumer staples. Gold does provide vital protection for financial, consumer discretionary, industrial, technology, and healthcare.

Investor Sentiment and Corporate Governance: The Role of Behavioral Biases in Stock Price Volatility and Managerial Decisions

Behavioural biases influence investor sentiment and behaviour, which in turn influence stock returns, stock price volatility and corporate governance structures. This paper focuses on the role of three common behavioural biases (overconfidence, herding and loss aversion) on investor behaviour, and how these biases drive inefficiencies in financial markets. Using worldwide market data from 1970 to 2019 and focusing on key events such as the 2008 financial crisis and the dot-com bubble, we investigate how these behavioural biases cause market volatility. This analysis further reinforces the importance of strong corporate governance structures such as independent boards, executive pay structures and risk management protocols that help reduce the impact of investor sentiment. The role of speculative bubbles, market overreaction and volatility clustering is also examined further, and corporate governance mechanisms are proposed to help mitigate the effects of behavioural biases on stock prices. The findings demonstrate the importance of adopting long-term corporate goals, transparency and strategies to help better manage market sentiment and safeguard shareholder value.

Mapping Risk–Return Linkages and Volatility Spillover in BRICS Stock Markets through the Lens of Linear and Non-Linear GARCH Models

This paper explores the influence of the risk–return relationship and volatility spillover on stock market returns of emerging economies, with a particular focus on the BRICS countries. This research is undertaken in a context where discussions on de-dollarization and the expansion of BRICS membership are gaining momentum, making it a novel and distinct exercise compared to prior studies. Utilizing econometric techniques to investigate daily market returns from 1 April 2008 to 31 March 2023, a period that witnessed major events like the global financial crisis, the COVID-19 pandemic, and the Russia–Ukraine conflict, linear and non-linear models like ARCH, GARCH, GARCH-M, EGARCH, and TGARCH, are employed to assess stock return volatility behaviour, assuming a Gaussian distribution of error terms. The diagnostic test confirms that the distribution is non-normal, stationary, and heteroscedastic. The key findings indicate a lack of the risk–return relationship across all BRICS stock markets, except for South Africa; a more pronounced effect of unpleasant news over pleasant news; a slow mean-reverting process in volatility; the EGARCH model is the best fit model as evidenced by a higher log likelihood and lower Akaike information criterion and Schwardz information criterion parameters; and finally, the presence of significant bidirectional and unidirectional spillover effects in the majority of instances. These findings are valuable for investors, regulators, and policymakers in enhancing returns and mitigating risk through portfolio diversification and informed decision making.

Integrating Robotics for Enhanced Business Operations

This research study delves into the strategic incorporation of robotics into global business operations, stressing the interaction between technological progress and geopolitical and economic factors. Through an analysis of historical events such as the Cold War, the rise of China, and the 2008 Financial Crisis, the study identifies trends that impact the development and spread of robotics technology. It also includes case studies of companies like Foxconn and Siemens, which shed light on the practical challenges and opportunities faced in different geopolitical and economic contexts. The findings emphasize the importance of geopolitical stability, regional dynamics, and workforce upskilling in the successful deployment of robotics. This research offers a comprehensive framework for businesses to navigate the complexities of international trade, geopolitical risks, and the changing robotics landscape, ultimately leading to improved operational efficiency and sustainable growth in a globalized market.

PAKISTANI YOUTH AND THEIR CURRENT FINANCIAL NEEDS. DO WE HAVE A PLAN?

Pakistan has been experiencing a financial crisis for several years, characterized by inflation and rising debt. These economic difficulties have had a significant impact on the country's young, who make up a significant portion of the population. In addition, current political crises and inflation have exacerbated the situation, leading to an increase in adolescent mental health crises.

Coordination of Monetary and Fiscal Policies from a Game Theoretic Perspective

Under the backdrop of a highly intricate international environment and sluggish recovery of the global economy, it is crucial to delve into methods for bolstering national economic prowess and promoting economic prosperity and stability. Monetary policy and fiscal policy, as two primary macro-control tools, play a pivotal role in national progress, with their effective coordination becoming a significant issue. Game theory, a tool to mathematically model decisions made by different individuals through logical analysis, provides a solid theoretical foundation and practical framework for studying the issue. This paper utilizes game theory to model the coordination among the two policy-makers, the central banks and the governments while establishing a payoff matrix that reflects their utilities. During normal or recovery periods, this paper views it as a cooperative game, and the cooperative equilibrium will be that both policy-makers choose expansionary policies. During financial crisis, this paper views it as a non-cooperative game, and the Nash equilibrium will be that both policy-makers choose contractionary policies. Additionally, this paper selects specific examples from Brazilian history to validate the rationality of the model while confirming that the short-term equilibrium aligns with the modeling conclusions.

Inspiration from the Deferred Prosecution Agreement: Based on Its Comparison with Chinas Compliance Non-prosecution System

Since the break out of the financial crisis in 2008, the US has attached more importance to economic surveillance. In order to avoid and fight against crimes which take place in big enterprises effectively, meanwhile, release the burden that the prosecution process might bring to companies, the legislature has come up with a new system called deferred prosecution and promoted its application in real practice. In recent years, the legislation has been widely used in many cases to tackle with the corruption problem, especially those happen in MNEs, who is powerful enough to play an essential role in global trade and economic growth, and has proved to be a success for it creates a balance between the benefit of MNEs and that of the country, purifying the market atmosphere and optimizing the market order. Similarly, China has a relevant system named Compliance Non-prosecution. However, there are some differences between two systems, also, application is still strictly limited in China. This essay aims at identifying the contrast of two systems and analysis the essence behind the differences, using cases from both China and the US as an example.

Restrictive monetary policy – an obstacle to foreign direct investment

This article examines some acute problems of Foreign Direct Investment (FDI), Monetary Policy and Inflation. Following a long declining trend, global FDI flows decreased in 2023 and remaining below the indicator of 2007, that is pre-global financial crisis level. According to international organizations, FDI flows were negatively affected by high interest rates, unfavourable financing conditions and situation on capital markets. The article considers the role of restrictive monetary policy alongside the theoretical aspects of global inflation. The author argues that the drop in international investment, in particular, can be attributed to Restrictive Monetary Policy in many countries. Restrictive Monetary Policy seems to underestimate the inflationary role of imperfect competition, the rise of prices for imported energy and food, the fluctuations of currency rates as well as expectations of the micro-level participants. The article provides certain economic recommendations to Russia’s regulators on Monetary and FDI Policy. In future the Bank of Russia may gradually move from Restrictive Monetary Policy to Expansionary Monetary Policy to provide stimulus for FDI. Also, this article summarizes the process of predicting future condition of the world economy in applying Kondratieff’s approach. The author concludes that it is necessary to continue studying the long wave theory with the aim of its further use in forecasting the events in Russia and worldwide.

Assessing stigma: Health and social worker regard towards working with people using illicit drugs in Athens, Greece

BackgroundAfter the 2008 Global Financial Crisis and resulting economic austerity, the rise in illicit drug use engendered an increased need for people who use drugs (PWUD) to access medical care, compounded by the COVID-19 pandemic. Research shows that perceptions of medical staff towards PWUD facilitate or act as a barrier to accessing health care. This study provides a better understanding of health and social work professionals’ perceptions by assessing stigma levels towards PWUD in Athens, Greece.MethodsThis is a mixed-method study. It calculates the stigma score for professionals (n = 60) and the stigma score associated with specific drugs based on the Medical Condition Regard Scale through a quantitative analysis of responses to a semi-structured online survey about attitudes of health and social work professionals towards PWUD. It draws on the qualitative analysis of 12 semi-structured interviews with 16 service managers, providers, and health services advocates working in the charity sector to determine whether perceptions of PWUD affect writing and implementing policy and protocols for services.ResultsStigma towards PWUD exists amongst health and social work professionals in Athens. Professionals who have worked with PWUD for longer periods of time, professionals who have had specific training on working with PWUD, and professionals who feel that they have the necessary training to work with PWUD all demonstrated a higher stigma score than those reporting the opposite. Cannabis and opioids were associated with lower stigma scores while shisha had the highest level of stigma associated with it. Finally, professional environments are not conducive to alleviating stigma as the lack of training specific to stigma, the lack of professional supervision, and worker burn-out are key barriers faced by professionals in their everyday practice.ConclusionsReducing and eliminating stigma towards PWUD among health and social workers requires immediate action. Measures to be taken include: introducing training programs focused on stigma towards PWUD to healthcare providers, social workers, lawyers, police, the media; increasing professional supervision on field work for health and social workers; introducing low barrier health care and specialist units. Peers and field-focused organisations should meaningfully participate in drug and alcohol policymaking, program development, and implementation.

Leveraging corporate governance characteristics for stock crash risk assessment

Causing considerable losses for individual investors, stock crashes are also potential triggers for wider financial crises. In contrast to existing research that primarily focuses on specific corporate governance characteristics in relation to stock crash risk, in this study, we construct a set of corporate governance attributes and employ machine learning techniques for a comprehensive assessment of stock crash risk. Through empirical analysis in the Chinese stock market, we find that our corporate governance attributes are effective indicators of stock crash risk, yielding statistically significant and economically meaningful crash risk assessment. Additionally, our heterogeneity tests suggest that firms with less concentrated shareholding result in superior assessment accuracy. This observation is consistent with prior findings that increased retail investor participation enhances corporate governance transparency, thereby contributing to better assessment performance. Industry-wise, the performance of crash risk assessment for real estate companies is higher than that for cultural, sports, and entertainment sectors. We speculate that these variations stem from industry-specific factors, such as business logic, operational models, and profit mechanisms. Our results also suggest that characteristics related to shareholder meetings are pivotal in assessing crash risks for manufacturing companies, while board-related features are essential for real estate firms. Overall, this study contributes to current literature by validating the feasibility of employing corporate governance characteristics to assess crash risk and by exploring the economic value of crash risk assessment. Furthermore, we discuss several valuable insights into the Chinese stock market through heterogeneity analysis.

Information flow between stock returns of advanced markets and emerging African economies

This article used transfer entropy techniques to examine information flows of daily stock market returns between advanced markets and emerging African economies. We modelled the information transfers across different periods of global shocks – the Federal Reserve Bank normalisation post the Global Financial Crisis, oil price shocks, BREXIT, the U.S.-China trade war, and COVID-19. Information interactions from advanced to African markets were moderate, occasionally mixed, and insignificant, leaving room for portfolio diversification. We also discovered some progress regarding the integration process between the developed and African markets on the back of noticeable information exchanges. Our findings from the information exchanges indicate that the stock markets of South Africa, Egypt, Nigeria, and Kenya have led the integration process ahead of their peers. To robust-check our results, we employed the wavelet multiple correlation (WMC) technique by modelling the multi-structure relationship among all the stock markets and confirmed the fast integration between the South African stock market and the developed markets. Our WMC results also revealed that portfolio diversification opportunities are feasible in the short term. The results present important implications for optimal risk management strategies and policy measures to anchor markets to withstand shocks.

Five decades of policymaking in the EU – background and overview of the current state of employee financial participation

Purpose Opinions drafted by the European Economic and Social Committee (EESC), and reports and studies by the European Parliament and 2014 and 2018 Resolutions on employee financial participation (EFP) emphasised the growing importance of EFP, particularly with respect to small and medium-sized enterprises. Against this background, the commission included the promotion of employee share ownership in its Action Plan to reform European company law and corporate governance and embarked on the 2013/14 Pilot Project. Based on the most recent data on the scope and impact of various EFP schemes in EU companies and the legal and regulatory changes in individual Member States, the aim of this article is to provide an overview of policymaking and the main trends of the dynamics of EFP over the last three decades.Design/methodology/approach We give an overview (1) of the analysis of the most recent rounds of different large-scale cross-country surveys (2015 European Working Conditions Survey, 2021 CRANET [Cranfield Network on International Human Resource Management], 2019 European Company Survey [ECS]) and (2) of the EU policy documents and legislative acts over the last three decades. We provide a tabular overview of the status quo in all 29 countries under consideration as of January 2024 to provide the reader with an Alta vista summary view of all forms of EFP practised.Findings The European Commission’s interest in EFP has grown substantially since the publication of the first PEPPER Report in 1991 and the Council Recommendation on EFP of 27 July 1992. Since then, the European Union has not only extended from 12 Members States to currently 27 but has also faced many complex and urgent challenges. Financial and other crises have endangered prosperity and cohesion on the continent and both, the financial crisis of 2008/09, and the coronavirus disease 2019 (COVID-19) pandemic 2020/21 have left their marks on “Social Europe”.Originality/value The European Commission’s interest in EFP has grown substantially since the publication of the first PEPPER (Promotion of Employee Participation in Profits and Enterprise Results) Report in 1991 and the Council Recommendation on EFP on 27 July 1992. Since then, the European Union has not only extended from 12 Members States to currently 27 but has also faced many complex and urgent challenges. Financial and other crises have endangered prosperity and cohesion on the continent and both, the financial crisis of 2008/09, and the COVID-19 pandemic 2020/21 have left their marks on “Social Europe”.

How artificial intelligence affects international industrial transfer ——Evidence from industrial robot application

The development of high technology represented by artificial intelligence is an essential driver of international industrial transfer. Using country-industry-level industrial robot data and value-added trade data from 2002-2018, this paper empirically examines the impact and mechanism of artificial intelligence on the international industrial transfer undertaken by a country (region). The study shows that the application of artificial intelligence can significantly enhance the international industrial transfer undertaken by a country (region). Further analysis shows that artificial intelligence positively affects international industry transfer through two channels: Improving the quality of labor force and promoting the level technological innovation. Further heterogeneity analysis shows that, first, from the economic development degree perspective, artificial intelligence's role in promoting developing economies is more substantial than that in developed economies. Second, the financial crisis has weakened the impact of artificial intelligence on international industrial transfer from the perspective of time division，especially in developing economies. Third, from the perspective of industry heterogeneity, artificial intelligence has significantly promoted the transfer of medium-low and medium-high technology industries. The research in this paper extends the analysis of the effect of artificial intelligence. It provides realistic insights for optimizing the strategic layout of the robotics industry, achieving industrial structure upgrading, optimizing resource allocation efficiency, and grasping the opportunities of global industrial chain restructuring.

Determinants of carbon emissions in Kenya and policy implications

Carbon dioxide emissions are the primary greenhouse gasses behind global climate change and its associated effects. Climate change adversely impacts the environment, biodiversity, and human health. The ability to tame carbon dioxide emissions will help in the fight against climate change. However, the recent pace of rising carbon dioxide emissions raises concerns about winning the war against climate change. World leaders are determined to take actions that will lower emissions. Thus, there is a worldwide effort to achieve net-zero emissions. Consequently, it is crucial to comprehend the specific factors that contribute to carbon emissions of specific economies so that countries can develop and enforce effective strategies for reducing carbon output, mitigating the effects of climate change, and improving recovery programs. Despite many empirical studies conducted in Africa on the determinants of carbon emissions, the results remain inconclusive and inadequate, leaving a void for further research. This study seeks to fill this knowledge gap by modeling the relationship between Kenya's carbon emissions (which have been increasing since the early 2000s), and mobile technology adoption, renewable energy mix, tourism development, development assistance, income, and global financial crises, utilizing the most current data from 1995 to 2021 from the World Bank's database. The ARDL, FMOLS, CCR, and DOLS analysis results reveal that mobile technology, tourism, development aid, and global financial crises increase Kenya's carbon emissions in the long run. At the same time, income and renewable energy reduce short- and long-term impacts. The significant insight from these results is that enhancing renewable energy development, mobile technology, and development assistance can promote a sustainable environment. From these findings, the study proposes many policy recommendations to help decision-makers, communities, companies, and the government in Kenya allocate resources and implement resilience and mitigation policies and programs in the areas most susceptible to the effects of climate change.

Mission creep at the Federal Reserve

AbstractSince the 2008 financial crisis, the Federal Reserve has expanded its objectives beyond the traditional scope of monetary policy. It directly allocates credit, incorporates inequality considerations into its employment goals, and seems prepared to involve itself in climate change policy. In response to these developments, we make three elementary but often overlooked points. First, the Fed has engaged in mission creep since its earliest days. Second, mission creep has intensified since the financial crisis due to increases in both the supply of and demand for central bank activism. We argue that the floor system and accompanying unconventional monetary policies reduced the cost of mission creep. Third, we explain the likely negative consequences of mission creep. These have three causes: (1) mission creep increases the scope of credible commitment problems, (2) novel policies suffer from major knowledge problems, and (3) since those policies make the Fed's activities harder to monitor, it becomes costlier to discipline the central bank. The results are a greater scope for regulatory capture, bureaucratic incompetence, and rent‐seeking.

Assessing the Pandemic Aviation Crisis: Speculative Behavior, Government Bail Outs, and Accommodative Monetary Policy

The COVID-19 pandemic was a health, economic, and financial crisis. The aviation sector was one of the most severely hit. Despite the extensive literature on this, COVID-Finance has been focused on stock returns, neglecting what could be learnt from the spreads of airlines’ credit default swaps (CDSs). This would seem of the utmost importance, given the epicenter of the crisis within the credit market. In this paper, an in-depth analysis of airlines’ CDS spreads is conducted. It is found that they were severely hit, for all airlines studied. However, the results of the PSY test showed that speculative trading led the surge, as explosive roots were found in the spreads of all these aviation firms. The dramatic increase in CDS spreads has contributed to already high borrowing costs for airlines. Our results suggest that aviation bail outs have helped to mitigate spreads’ explosiveness. Monetary policy measures have also limited, albeit indirectly, the funding risk posed by the government bail outs. By the end of March 2021, spreads were no longer explosive, and were approaching, at highly heterogeneous paces, their pre-pandemic values. Notwithstanding, airlines’ stock prices have been notably resistant to recovery.