Search results
1 – 10 of over 37000Carolina M. Vargas, Lenis Saweda O. Liverpool-Tasie and Thomas Reardon
We study five exogenous shocks: climate, violence, price hikes, spoilage and the COVID-19 lockdown. We analyze the association between these shocks and trader characteristics…
Abstract
Purpose
We study five exogenous shocks: climate, violence, price hikes, spoilage and the COVID-19 lockdown. We analyze the association between these shocks and trader characteristics, reflecting trader vulnerability.
Design/methodology/approach
Using primary survey data on 1,100 Nigerian maize traders for 2021 (controlling for shocks in 2017), we use probit models to estimate the probabilities of experiencing climate, violence, disease and cost shocks associated with trader characteristics (gender, size and region) and to estimate the probability of vulnerability (experiencing severe impacts).
Findings
Traders are prone to experiencing more than one shock, which increases the intensity of the shocks. Price shocks are often accompanied by violence, climate and COVID-19 shocks. The poorer northern region is disproportionately affected by shocks. Northern traders experience more price shocks while Southern traders are more affected by violence shocks given their dependence on long supply chains from the north for their maize. Female traders are more likely to experience violent events than men who tend to be more exposed to climate shocks.
Research limitations/implications
The data only permit analysis of the general degree of impact of a shock rather than quantifying lost income.
Originality/value
This paper is the first to analyze the incidence of multiple shocks on grain traders and the unequal distribution of negative impacts. It is the first such in Africa based on a large sample of grain traders from a primary survey.
Details
Keywords
Pratik Modi, Vivek Pandey and Abhi Bhattacharya
This research investigates the impact of strategic research and development (R&D) (one led by a firm’s innovation orientation) on stock market performance during the economic…
Abstract
Purpose
This research investigates the impact of strategic research and development (R&D) (one led by a firm’s innovation orientation) on stock market performance during the economic disruption caused by the 2016 demonetization of high-value currency notes in India. It shows how firms’ strategic focus on innovation and integrated R&D initiatives can help mitigate shareholders’ losses and protect market value during negative macroeconomic shocks.
Design/methodology/approach
We analyzed financial and administrative data from firms listed in the Bombay Stock Exchange (BSE) 500 index and used the Fama French market model with appropriate instruments accounting for possible endogeneity to identify the impact. To ensure the reliability of our findings, we conducted robustness checks with alternate event windows, estimation methods, and variable measurements.
Findings
Strategic R&D plays a crucial role in building resilience against macroeconomic shocks. It effectively mitigated shareholders’ losses in the immediate aftermath of the shock, with an elasticity of abnormal returns of 7.65% on day zero, 13.1% during the first five days and 10.5% after the first fortnight. We also find that firms that are business-to-business (B2B), as well as those that are older and less leveraged, are better able to combat such a shock.
Research limitations/implications
The study looked at one shock, namely demonetization. Future research is needed to demonstrate the generalizability of results during other macroeconomic shocks, like the COVID-19 pandemic. The study focuses on relatively near-term impacts, leaving the long-term value-creation effects of strategic R&D unexplored.
Practical implications
Innovation orientation acts as a structural enabler, allowing firms to make strategic R&D investments that mitigate losses during macroeconomic shocks. It explains that managers should avoid myopically managing R&D investments and align them with the firm’s innovation focus to enhance value creation.
Social implications
While the currency demonetization was widely considered to be detrimental for firms as an unannounced negative monetary shock, our research shows that firms with high levels of strategic R&D were successfully able to counteract such a shock.
Originality/value
This is the first study to examine the short-term loss mitigation impact of firms’ focus on innovation and strategic R&D. It emphasizes the role of innovation-focused strategies during economic crises.
Details
Keywords
Praveenkumar Thaloor Ramesh, Vijayaraja Kengaiah, Endalkachew Mosisa Gutema, Prabu Velusamy and Dhivya Balamoorthy
The purpose of the study is to design economical shock tube. It is an instrument used for experimental investigations not only related to shock phenomena but also for the behavior…
Abstract
Purpose
The purpose of the study is to design economical shock tube. It is an instrument used for experimental investigations not only related to shock phenomena but also for the behavior of the material when it is subjected to high-speed flow. The material used here in this shock tube is stainless steel ss304 and aluminum. A shock tube consists of two sections, namely, the driver and the driven. The gas in the driven and driver is filled with atmospheric air and nitrogen, respectively, under the predominant condition.
Design/methodology/approach
The focus of the study is on the design and fabrication of shock tubes. a shock tube is a research tool to make an aerodynamic test in the presence of high pressure and temperature by generating moving normal shock waves under controlled conditions.
Findings
The main necessity for instrumentation in the shock tube experiment is to know the velocity of the moving shock wave from which the other parameters can be calculated. the pressure transducers are located in the shock tube in various locations to measure aerodynamic parameters in terms of pressure.
Originality/value
The main objective of this project work is to make an experimental setup to produce supersonic velocity with the readily available material in the market in a highly safe manner.
Details
Keywords
Alagar Rangan, Dimple Thyagarajan and Y Sarada
The purpose of this paper is to generalize Yeh and Zhang's 2004 random threshold failure model for deteriorating systems.
Abstract
Purpose
The purpose of this paper is to generalize Yeh and Zhang's 2004 random threshold failure model for deteriorating systems.
Design/methodology/approach
An N‐policy was adopted by which the system was replaced after the Nth failure.
Findings
The model was found to have practical applications in warranty cost analysis.
Originality/value
By identifying the instance of a shock as the failure of the system and the threshold times as the warranty period offered and changing the definition of lethal shock (system failure in this case) as the occurrence of a shock within a threshold period in our generalized model, one can study the renewing warranty cost analysis.
Details
Keywords
Michael Funke and Stephen Hall
UK regional data on GDP and the GDP deflator are analysed to extract information on underlying demand and supply shocks as well as aggregate demand and supply shocks…
Abstract
UK regional data on GDP and the GDP deflator are analysed to extract information on underlying demand and supply shocks as well as aggregate demand and supply shocks. Identification is achieved using long run restrictions, based on a theoretical model. The main results are that the supply shocks are almost completely symmetric across UK regions and that there is no evidence of these shocks being propagated slowly across the regions.
Details
Keywords
Francisca Letícia Ferreira de Lima, Rafael Barros Barbosa, Alesandra Benevides and Fernando Daniel de Oliveira Mayorga
This paper examines the impact of extreme rainfall shocks on the performance in test scores of students living near at-risk urban areas in Brazil.
Abstract
Purpose
This paper examines the impact of extreme rainfall shocks on the performance in test scores of students living near at-risk urban areas in Brazil.
Design/methodology/approach
To identify the causal effect, we consider the exogenous variation of rainfall at the municipal level conditioned on the distance from the school to risk areas and the rainfall intensity in the school months.
Findings
The results suggest that extreme precipitation shocks, defined as a shock of at least three months of high-intensity rainfall, have an adverse impact on both math and language performance. Through a heterogeneous effects analysis, we find that the impact varies by student gender, with girls being more affected. In addition, among students who study near at-risk areas, those with better previous school performance and higher socioeconomic status are more negatively affected.
Originality/value
Our results suggest that extreme weather events can increase the differences in human capital accumulation between the population living near risk areas and those living more distant from these areas.
Details
Keywords
Luccas Assis Attílio, Joao Ricardo Faria and Mauricio Prado
The authors investigate the impact of the US stock market on the economies of the BRICS and major industrialized economies (G7).
Abstract
Purpose
The authors investigate the impact of the US stock market on the economies of the BRICS and major industrialized economies (G7).
Design/methodology/approach
The authors construct the world economy and the vulnerability between economies using three economic integration variables: bilateral trade, bilateral direct investment and bilateral equity positions. Global vector autoregressive (GVAR) empirical studies usually adopt trade integration to estimate models. The authors complement these studies by using bilateral financial flows.
Findings
The authors summarize the results in four points: (1) financial integration variables increase the effect of the US stock market on the BRICS and G7, (2) the US shock produces similar responses in these groups regarding industrial production, stock markets and confidence but different responses regarding domestic currencies: in the BRICS, the authors detect appreciation of the currencies, while in the G7, the authors find depreciation, (3) G7 stock markets and policy rates are more sensitive to the US shock than the BRICS and (4) the estimates point out to heterogeneities such as the importance of industrial production to the transmission shock in Japan and China, the exchange rate to India, Japan and the UK, the interest rates to the Eurozone and the UK and confidence to Brazil, South Africa and Canada.
Research limitations/implications
The results reinforce the importance of taking into account different levels of economic development.
Originality/value
The authors construct the world economy and the vulnerability between economies using three economic integration variables: bilateral trade, bilateral direct investment and bilateral equity positions. GVAR empirical studies usually adopt trade integration to estimate models. The authors complement these studies by using bilateral financial flows.
Details
Keywords
Julien Dhima and Catherine Bruneau
This study aims to demonstrate and measure the impact of liquidity shocks on a bank’s solvency, especially when the bank does not hold sufficient liquid assets.
Abstract
Purpose
This study aims to demonstrate and measure the impact of liquidity shocks on a bank’s solvency, especially when the bank does not hold sufficient liquid assets.
Design/methodology/approach
The proposed model is an extension of Merton’s (1974) model. It assesses the bank’s probability of default over one or two (short) periods relative to liquidity shocks. The shock scenarios are materialised by different net demands for the withdrawal of funds (NDWF) and may lead the bank to sell illiquid assets at a depreciated value. We consider the possibility of second-round effects at the beginning of the second period by introducing the probability of their occurrence. This probability depends on the proportion of illiquid assets put up for sale following the initial shock in different dependency scenarios.
Findings
We observe a positive relationship between the initial NDWF and the bank’s probability of default (particularly over the second period, which is conditional on the second-round effects). However, this relationship is not linear, and a significant proportion of liquid assets makes it possible to attenuate or even eliminate the effects of shock scenarios on bank solvency.
Practical implications
The proposed model enables banks to determine the necessary level of liquid assets, allowing them to resist (i.e. remain solvent) different liquidity shock scenarios for both periods (including eventual second-round effects) under the assumptions considered. Therefore, it can contribute to complementing or improving current internal liquidity adequacy assessment processes (ILAAPs).
Originality/value
The proposed microprudential approach consists of measuring the impact of liquidity risk on a bank’s solvency, complementing the current prudential framework in which these two topics are treated separately. It also complements the existing literature, in which the impact of liquidity risk on solvency risk has not been sufficiently studied. Finally, our model allows banks to manage liquidity using a solvency approach.
Details
Keywords
- Liquidity shock scenarios
- Bank solvency
- Probability of default (over one and two periods)
- Net demand for the withdrawal of funds (NDWF)
- Liquid and illiquid assets
- Second-round effects
- Probability of the occurrence of second-round effects
- Internal liquidity adequacy assessment process (ILAAP)
- C30
- G01
- G21
- G33
Whayoung Jung and Ji Hyung Lee
This chapter studies the dynamic responses of the conditional quantiles and their applications in macroeconomics and finance. The authors build a multi-equation autoregressive…
Abstract
This chapter studies the dynamic responses of the conditional quantiles and their applications in macroeconomics and finance. The authors build a multi-equation autoregressive conditional quantile model and propose a new construction of quantile impulse response functions (QIRFs). The tool set of QIRFs provides detailed distributional evolution of an outcome variable to economic shocks. The authors show the left tail of economic activity is the most responsive to monetary policy and financial shocks. The impacts of the shocks on Growth-at-Risk (the 5% quantile of economic activity) during the Global Financial Crisis are assessed. The authors also examine how the economy responds to a hypothetical financial distress scenario.
Details
Keywords
Andrew J. Jalil and Gisela Rua
We document how inflation expectations evolved in the United States during the fall of 1933 using narrative evidence from historical news accounts and the forecasts of…
Abstract
We document how inflation expectations evolved in the United States during the fall of 1933 using narrative evidence from historical news accounts and the forecasts of contemporary business analysts. We find that inflation expectations, after rising substantially during the spring of 1933, moderated in the fall in response to mixed messages from the Roosevelt Administration. The narrative accounts and our econometric model connect the dramatic swings in output growth in 1933 – the rapid recovery in the spring and the setback in the fall – to these sudden movements in inflation expectations.
Details