Financial Meltdown Research Articles

Risk Analysis of Mortgage Loan Default for Bank Customers and AI Machine Learning

Abstract Risk Analysis of Mortgage Loan Default for Banks is a crucial issue. On one hand, it concerns the quality of the bank's credit decisions, and on the other hand, it affects the rights of homebuyers to obtain financial support. In 2008, the U.S. subprime mortgage crisis sparked a global financial meltdown. What began with the collapse of the housing market quickly spread throughout the global financial system, resulting in the failure of numerous banks and a widespread economic recession. Recently, the banking sector has increasingly leveraged Artificial Intelligence (AI) and Machine Learning (ML) to enhance decision-making processes, particularly in assessing the risk of mortgage loan defaults. This paper aims to explore the application of ML techniques to predict and analyze the risk of default among bank customers, thereby enabling financial institutions to make more accurate and informed lending decisions. Keywords: Mortgage Loan Default Risk Analysis AI ML K-MANS LTV.

The "Pots and Pans" protests and requirements for responsiveness of the authorities

This paper examines under what conditions it is justifiable that the government takes into account the demands of protesters and whether the terms of procedural-equality in protest participation were met in the ‘Pots and Pans’ protests in Iceland in 2008–09. The protests were triggered by a financial melt-down in Iceland and did not come to an end until almost all the main demands of the protesters had been met. The main conclusion is that due to the seriousness of the issues which triggered the protests and that those issues were of national concern, together with the large numbers of protesters and wide support for their demands as well as extensive public discussion about the issues of the protests, they were a prime example of a situation when the authorities should consider taking the demands of protesters into account. Furthermore, in this paper it is established that giving in to the demands of the protesters was within the terms of procedural-equality between the protesters and those who did not participate – adding to the justification that, in this case, it was justifiable to defer to the protesters’ demands.

South Africa’s Housing Financialisation Crises and Social Resistance

The world’s most unequal country suffers from various housing crises, especially when it comes to excessive reliance upon a private sector prone to market failures, especially affordability. State housing finance strategy during the transition from apartheid to democracy relied upon augmentation of formal banking finance so as to promote home ownership. But as macro-economic conditions changed in the late 1980s, the resulting mass defaults on individual families’ home mortgage bonds led not only to foreclosures by a (white) state, but (black) working-class resistance organised by the country’s leading urban social movement, known as the ‘bond boycott.’ Even after democracy, a worsening housing backlog coincided with resurgence of household debt crises in the wake of the 2008 global financial meltdown. That generated a new housing finance strategy led by Mastercard and a local fintech firm (supported by the World Bank): collateralisation of welfare grants which in turn allowed debit orders for repayment of microfinance (typically used for minor home improvements). Again, social resistance played an important role, as the strategy caused even worse personal debt crises, and a welfare NGO’s successful fight to close Mastercard’s partner. But beyond periodic revolts of these sorts, a durable housing finance policy has remained elusive.

Spillovers across global stock markets before and after the declaration of Russia’s invasion of Ukraine

Since the financial meltdown, studies on systemic risk and financial contagion have gained currency. Events like the COVID pandemic and the Russian invasion of Ukraine have fueled such an importance. This study examines the impact of the invasion on volatility transmissions across major stock markets worldwide. The stock indices considered in this study are ASX 200, ESTOXX 40, FTSE 100, HNGSNG, NIFTY 50, NIKKIE, and S&P 500. The work uses Vector Auto Regression (VAR) to study the transmission of returns. Later, the work performs Dynamic Conditional Covariance-Generalized Auto Regression Conditional Heteroskedasticity (DCC-GARCH) on the residuals where the transmission of returns was significant. The DCC-GARCH (E-GARCH) shows that all the asymmetric transmissions are negative. The study finds that co-movements of stock returns for the following pairs: ESTOXX 50-S&P 500, NIFTY 50-FTSE100, NIFTY 50-NIKKIE, NIKKIE-ESTOXX 50, S&P 500-NIFTY 50, and SP500-HNGSNG significantly intensified after the declaration of invasion. Such intensification of co-movements does establish the contagion effect triggered by invasion. The study shows that ESTOXX 50, which has the closest geographical proximity to the war zone, happens to be the highest generator of spillovers.

Croatia’s Uneasy First Decade in the European Union

Croatia celebrated a decade of membership in the European Union by joining the euro currency and the Schengen Area of free movement on January 1, 2023. At the same time, however, the country is struggling with the economic, social, and political consequences of its semi-peripheral status. A series of reform challenges remain unsolved, including the continued dominance of clientelistic networks. Amid a set of overlapping crises, from the global financial meltdown to the COVID-19 pandemic, the country has seen a revival of conservative and patriarchal ideologies.

Ethics in Business

One intricate and perhaps, divisive task in philosophy is that of gauging growth in societies. The complexity stems from the reality that everyone seems to possess a template for growth, and so people are wont to use different yardsticks for its measurement. For the technically inclined, the index is science; in civil circles, the measure is perhaps, that of political evolution; and in religious spheres, it is increase in membership/physical structures. Ironically, all the advances arising thereof have been marred and sometimes eclipsed by torrid upheavals: violent overthrow of governments and wars; financial meltdowns; scourge of pandemics; prospects of nuclear combat; religious bigotry; chaotic climate, etc., that make life precarious. Human civilization is on the brink of self-destruct. “Ethics in Business” reimagines the interconnectivity of all spheres of human life, and proposes that the opportunity to redeem our broken world is tied to reengineering the values of trust and loyalty.

Labour Under New Management

ABSTRACT: In the next British general election, due to happen within the year, the Labour Party is set to sweep into power after fourteen years in opposition. Its two major rivals, the Conservative Party and the Scottish National Party (SNP), have imploded in scandal and division. The financial meltdown unleashed by the forty-nine-day tenure of former Prime Minister Liz Truss propelled Labour to a commanding position in national opinion polls, one that her successor, Rishi Sunak, has been unable to dent at the time of writing. A police investigation into misappropriation of donations and the resignation of First Minister of Scotland Nicola Sturgeon have undermined the SNP at a moment when the pandemic, war, and Conservative vulnerability have made the case for independence seem far less pressing than it did a decade ago. Local council and by-election results from the rural shires of Yorkshire to the satellite towns of Glasgow suggest that Labour is advancing on all fronts.

Labour Under New Management

ABSTRACT: In the next British general election, due to happen within the year, the Labour Party is set to sweep into power after fourteen years in opposition. Its two major rivals, the Conservative Party and the Scottish National Party (SNP), have imploded in scandal and division. The financial meltdown unleashed by the forty-nine-day tenure of former Prime Minister Liz Truss propelled Labour to a commanding position in national opinion polls, one that her successor, Rishi Sunak, has been unable to dent at the time of writing. A police investigation into misappropriation of donations and the resignation of First Minister of Scotland Nicola Sturgeon have undermined the SNP at a moment when the pandemic, war, and Conservative vulnerability have made the case for independence seem far less pressing than it did a decade ago. Local council and by-election results from the rural shires of Yorkshire to the satellite towns of Glasgow suggest that Labour is advancing on all fronts.

Narrating Sexual Blackmail in Lebanon: A Present-Day Pathography

ABSTRACT An ongoing economic and financial meltdown, the COVID-19 pandemic, and the August 4, 2020 explosion of Beirut Port—since 2019, Lebanon has been assailed by a spiralling confluence of mutually exacerbating crises. The present-day poverty, hunger, and unemployment levels are coeval with an extraordinary rise of similarly hyper-endemic sextortion cases. While drawing on its author’s experience of sexual blackmail in Lebanon, this article narrates the various parameters of this pathology and its trauma—its perpetrators, progression, and victims—in relation to several documented instances of this illness, including three excerpts from my students’ memoirs (2020–2023). The resulting ‘pathography’ reveals sexual blackmail in Lebanon as a nuanced corollary of not only socioeconomic tensions, but also sex stigma. In a context where societal attitudes to sexuality remain, to a significant extent, regressive, being sexually active, regardless of sexual orientation, incurs a status quo of shaming and silencing that most affects the sexual and mental health of the country’s vulnerable groups: youth, particularly women, and queer individuals more generally.

PORTFOLIO MANAGEMENT AND SYSTEMIC RISK IN THE AGE OF ARIFICIAL INTELLIGENCE

Artificial intelligence has emerged as a transformative force with profound implications for diverse domains, including finance and portfolio management. This paper delves into the multifaceted impact of AI on portfolio management and the dynamic landscape of systemic risk. The proliferation of AI is fueled by rapid advancements in computational capabilities, the abundance of extensive datasets, and breakthroughs in AI algorithms. It offers unparalleled accuracy, speed, and practical applicability, revolutionizing traditional paradigms. Globalization and AI applications have amplified systemic risks on a global scale, necessitating a reevaluation of risk management strategies. Conventional portfolio theories, like Modern portfolio theory, have historically emphasized the diversification of idiosyncratic risks while downplaying systemic risk. The comprehension and effective mitigation of systemic risks are paramount to preserving financial stability, particularly in the aftermath of systemic crises such as the 2007 2009 financial meltdown. AI's transformative potential extends beyond risk management, reshaping the labor landscape in asset management. Forecasts anticipate substantial job reductions in the field, prompting professionals to embrace adaptability and acquire new skill sets. This paper examines AI's integration into portfolio management, shedding light on the intricate interplay between AI, systemic risk dynamics, and investment practices. In conclusion, the integration of AI into portfolio management heralds an era of unparalleled opportunities and complex challenges. AI's capacity to process vast datasets, enhance pattern recognition, and refine predictive modeling has reinvented investment methodologies. However, this paradigm shift comes with inherent risks, especially pertaining to systemic instability. Identifying, understanding, and mitigating these risks is pivotal for sustaining financial market. Collaborative efforts among industry experts, regulators, and AI developers are instrumental in fostering responsible and sustainable AI integration within financial markets. As AI continues to exert its influence, professionals must remain adaptable and acquire new competencies to navigate the evolving financial landscape effectively. The future of portfolio management lies in harnessing AI's capabilities while safeguarding against potential pitfalls, ultimately steering the financial sector toward greater efficiency and resilience.

Herding in the Australian stock market during the era of COVID-19: the roles of liquidity, government interventions and mood contagion

PurposeThis study explores the economic impact of the COVID-19 crisis on herding behaviour in the Australian equity market by considering liquidity, government interventions and sentiment contagion.Design/methodology/approachThis study utilizes a daily dataset of the top 500 stocks in the Australian market from January 2009 to December 2021. Both predictive regression and portfolio approaches are employed to consider the impact of COVID-19 on herding intention.FindingsThis study confirms that herding propensity is more pronounced at the beginning of the crisis and becomes less significant towards later phases when reverse herding is more visible. Investors herd more toward sectors with less available information on financial support from the government during the financial meltdown. Conditioning the stock liquidity, herding is only detectable during highly liquid periods and high-liquid stocks, which is more observable during the initial phases of the crisis. Further, the mood contagion from the United States (US) market to Australian market and asymmetric herding intention are evident during the pandemic.Originality/valueThis is the first study to shed further light on the impact of a health crisis on the trading behaviour of Australian investors, which is driven by liquidity, public information and sentiment. Notwithstanding the theoretical contributions to the prior literature, several practical implications are proposed for businesses, policymakers and investors during uncertainty periods.

The Silicon Valley Bank Failure: Application of Benford’s Law to Spot Abnormalities and Risks

Data are produced every single instant in the modern era of technological breakthroughs we live in today and is correctly termed as the lifeblood of today’s world; whether it is Google or Meta, everyone depends on data to survive. But, with the immense surge in technological boom comes several backlashes that tend to pull it down; one similar instance is the data morphing or modification of the data unethically. In many jurisdictions, the phenomenon of data morphing is considered a severe offense, subject to lifelong imprisonment. There are several cases where data are altered to encrypt reliable details. Recently, in March 2023, Silicon Valley Bank collapsed following unrest prompted by increasing rates. Silicon Valley Bank ran out of money as entrepreneurial investors pulled investments to maintain their businesses afloat in a frigid backdrop for IPOs and individual financing. The bank’s collapse was the biggest since the financial meltdown of 2008 and the second-largest commercial catastrophe in American history. By confirming the “Silicon Valley Bank” stock price data, we will delve further into the actual condition of whether there has been any data morphing in the data put forward by the Silicon Valley Bank. To accomplish the very same, we applied a very well-known statistical paradigm, Benford’s Law and have cross-validated the results using comparable statistics, like Zipf’s Law, to corroborate the findings. Benford’s Law has several temporal proximities, known as conformal ranges, which provide a closer examination of the extent of data morphing that has occurred in the data presented by the various organizations. In this research for validating the stock price data, we have considered the opening, closing, and highest prices of stocks for a time frame of 36 years, between 1987 and 2023. Though it is worth mentioning that the data used for this research are coarse-grained, still since the validation is subjected to a larger time horizon of 36 years; Benford’s Law and the similar statistics used in this article can point out any irregularities, which can result in some insight into the situation and into whether there has been any data morphing in the Stock Price data presented by SVB or not. This research has clearly shown that the stock price variations of the SVB diverge much from the permissible ranges, which can give a conclusive direction on further investigations in this issue by the responsible authorities. In addition, readers of this article must note that the conclusion formed about the topic discussed in this article is objective and entirely based on statistical analysis and factual figures presented by the Silicon Valley Bank Group.

Information misbehavior: How organizations use information to deceive

AbstractRecent examples of organizational wrongdoing such as those that led to the opioid crisis and the 2008 financial meltdown show that organizations can deliberately use information to deceive others, resulting in serious harm. This brief communication explores the role of information in organizational wrongdoing. We analyze a dataset consisting of 80 cases of high‐penalty corporate wrongdoing in the United States in the period 2000–2020. Our analysis of documents filed by the US Department of Justice and federal regulatory agencies in those cases found that organizations use two general information strategies to deceive and mislead. First, organizations can “sow doubt” on statements by others that hurt the organization's interests. Second, organizations can “exploit trust” that others have placed in them to provide truthful information. Our analysis suggests that which strategy is adopted depends on the degree that the organization's external information use environment is “contested” or “controlled.” Across the cases examined, we observe three types of information behaviors that implement the strategy of sowing doubt and exploiting trust: information obfuscation, information concealment, and information falsification.

A network analysis on country and financial center attractiveness: Evidence from Asian economies, 2001–2018

By using a network analysis that incorporates both quantity and quality assessments, this paper investigates the two factors of country and financial brokerage center for investment attractiveness as the dynamic forces of development among Asian economies. The sample period of 2001–2018 is important for Asian economies as the region experienced the aftermath of the 1997 Asian financial crisis and the devastating 2008 global financial meltdown. The study developed an attractiveness index, investigated its underlying determinants, and diagnosed both country and financial attractiveness, which are then applied to the Asian economies. The empirical findings show that Asia's intra-regional attractiveness can also be used to explain their economic success.

Embracing Opportunity and Bracing for the Future: Renewal Discourse and Inoculation

This paper explores the potential to address mid-crisis communication needs in longitudinal crises by using a paired renewal discourse and inoculation messaging strategy. While renewal discourse focuses on inherent opportunities and the possibility for organizations to improve following a crisis, insulating stakeholder views from ongoing and future crisis effects with inoculation messaging during the crisis can improve the durability of positive outcomes. Theoretically driven rhetorical analysis is used to examine stakeholder communication from one of the two firms that survived The Weekend Wall Street Died in September 2008, a midpoint in the 18-month global financial meltdown. The results demonstrate mid-crisis as a distinct communication exigency and the applied use of a paired renewal discourse and inoculation strategy as a crisis and ongoing risk management approach.

Stalled by design: New paradoxes in the European Union’s single financial market

ABSTRACT Since the US financial meltdown in 2008 that sparked a Eurozone crisis, the European Union has introduced new financial market initiatives that were intended to advance integration, bring stability, and create shared prosperity for EU members. Innovations included Banking Union, Capital Markets Union, and the European Fund for Strategic Investments. We find, however, that tensions between supranationalization and retaining national control in institutional design diminished incentives for full participation, particularly among the EU’s East Central European members. Uneven levels of foreign bank ownership between East and West Europe, disparities in the depth of capital markets, and varying institutional capacity have often led Eastern member states to opt out. Paradoxically, initiatives intended to advance integration and overcome developmental inequalities have instead compounded national fragmentation and restricted pathways to catching up for some of the EU’s less prosperous members. Thus, European financial integration was stalled by design.

Impact of Bank Regulations on Banks' Profitability: Cross-Country Evidence

The clarion call for reform in bank regulation that ensures sound financial system and better performance following the financial melt-down of 2007–2009 across the globe has made it necessary to identify reforms that ensure these objectives are achieved. Using the most recent Banking Regulation and Supervision Survey of the World Bank and showing through empirical evidence, this paper adds to recent literature on the assessment of the impact of bank regulation on the profitability of banks across the globe. An Orbis financial database for 7535 banks observations in 114 countries over the period 2011–2018 is used for this study. The study shows that stringent capital requirement has positive and very significant impact on bank profitability. Same result is reported for Accounting/Information disclosure implying that regulations that strictly enforce information disclosure by banks to stakeholders eventually impacts positively on profitability. However, regulation on discipline/Problem institutions/exit has very significant and negative impact on bank profitability. Finally, the study again shows through the results that restriction on banking activities has positive impact on bank profitability though not significant just as expected.

Investing in People (The Presidential Address)

Syed Naveed Qamar, Federal Minister for Petroleum and Natural Resources, Dr Ishfaq Ahmad, Deputy Chairman, Planning Commission, Professor Syed Nawab Haider Naqvi, Former President, PSDE, Dr Sarfraz Khan Qureshi, Former President, PSDE, Dr G. M. Arif, Secretary, PSDE, Past Presidents and Distinguished Members of the Society. Excellencies, Ladies and Gentlemen It is my pleasure to welcome you all to the 25th Annual General Meeting and Conference of the Pakistan Society of Development Economists. We are extremely grateful to Syed Naveed Qamar, Federal Minister, Petroleum and Natural Resources, for having spared his precious time to join us at the inaugural session. It was during your tenure as Finance Minister that important and difficult economic decisions were taken to restore macroeconomic stability resulting from the unprecedented increases in international commodity prices, the global financial meltdown and neglect and inaction of past policy-makers. That the economy today has achieved macro stability in many of the key indicators is to a large measure the result of these decisions. I am also extremely grateful to our Patron Dr Ishfaq Ahmad, Deputy Chairman, Planning Commission, for his active interest and support to the work of our Society. A warm welcome to our members and guests who have come from different parts of the country and abroad. It is especially satisfying to see our future economists from all over the country join us at the Conference. Let me join Dr Arif in welcoming Dr Mohsin Khan who will be delivering the Quaid-i-Azam Lecture, Professor Hirashima who will be delivering the Allama Iqbal Lecture, Professor John Casterline, the Mahbubul Haq Lecture and Professor Robin Burgess, the Gustav Ranis Lecture (which we started last year).

Nonlinear Spillover and Dynamic Connectedness Between International Crude Oil and Dow Jones Islamic Market

This study examines crude oil prices throughout the world, as well as significant stock returns of European oil importers and exporters (the UK, Germany, France, Italy, Switzerland, and the Netherlands) (Norway and Russia). Indexes of sustainability stocks have a greater correlation with countries that import oil than with those that export oil. There was a stronger correlation between oil prices and stock prices both during and after the global financial meltdown in 2008. Study findings reveal a strong correlation between worldwide crude oil prices and major indices of countries that purchase or export oil. Our results have the potential to assist socially aware investors in hedging and diversifying their portfolios.

Transmission Mysteries: Art and Technophilia

Transmission Mysteries: Art and Technophilia