Contagion of financial crises: what does the empirical evidence show?

Contagion of financial crises: what does the empirical evidence show? Purpose – The purpose of this paper is to give an overview of variability of empirical results of several financial contagion studies, taking into account the role of financial markets, data sets and the applied definitions and methods that may explain the variability of empirical evidence. Design/methodology/approach – The authors used qualitative analysis of published research materials about previous financial crises and analyzed the variability of empirical results of around 75 studies of financial contagion, taking into account the particularities of financial markets, data sets and tests methods. Findings – The results of the analysis show that empirical studies provide heterogeneous results depending on applied definitions and methods, as well as chosen crises, destination countries and financial indices. Summing up all the relevant empirical findings the results supporting the contagion hypothesis are in clear dominance, but taking into account differences in definitions and testing methodologies the research did not reveal clear results as to which evidence dominates or should dominate. Research limitations/implications – The authors conclude that solely qualitative analysis of published research materials about previous financial crises does not give sufficient information to elaborate proper management measures to prevent serious consequences of financial crises. The authors propose that it is possible to obtain a more adequate picture of financial contagion by using a meta‐analysis, which the authors are planning to do in future studies. Practical implications – The paper provides information about some reasons that explain the variability of the results that are presented in the empirical studies about financial contagion. This information can be used for elaborating policy proposals and regulations that can help alleviate possible negative consequences of financial contagion. The paper shows the way for future articles summarising financial contagion. Originality/value – The study sums up previous findings on the field of financial contagion and shows the insufficiency of the traditional literature review to accomplish that task. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Baltic Journal of Management Emerald Publishing

Contagion of financial crises: what does the empirical evidence show?

Baltic Journal of Management, Volume 7 (1): 24 – Jan 6, 2012

Loading next page...
 
/lp/emerald-publishing/contagion-of-financial-crises-what-does-the-empirical-evidence-show-FtR9j7w7vO
Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
1746-5265
DOI
10.1108/17465261211195883
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to give an overview of variability of empirical results of several financial contagion studies, taking into account the role of financial markets, data sets and the applied definitions and methods that may explain the variability of empirical evidence. Design/methodology/approach – The authors used qualitative analysis of published research materials about previous financial crises and analyzed the variability of empirical results of around 75 studies of financial contagion, taking into account the particularities of financial markets, data sets and tests methods. Findings – The results of the analysis show that empirical studies provide heterogeneous results depending on applied definitions and methods, as well as chosen crises, destination countries and financial indices. Summing up all the relevant empirical findings the results supporting the contagion hypothesis are in clear dominance, but taking into account differences in definitions and testing methodologies the research did not reveal clear results as to which evidence dominates or should dominate. Research limitations/implications – The authors conclude that solely qualitative analysis of published research materials about previous financial crises does not give sufficient information to elaborate proper management measures to prevent serious consequences of financial crises. The authors propose that it is possible to obtain a more adequate picture of financial contagion by using a meta‐analysis, which the authors are planning to do in future studies. Practical implications – The paper provides information about some reasons that explain the variability of the results that are presented in the empirical studies about financial contagion. This information can be used for elaborating policy proposals and regulations that can help alleviate possible negative consequences of financial contagion. The paper shows the way for future articles summarising financial contagion. Originality/value – The study sums up previous findings on the field of financial contagion and shows the insufficiency of the traditional literature review to accomplish that task.

Journal

Baltic Journal of ManagementEmerald Publishing

Published: Jan 6, 2012

Keywords: Economics research; Research work; Financial analysis; Financial contagion; Financial crises

References

  • Testing for financial contagion between developed and emerging markets during the 1997 East Asian crisis
    Arestis, P.; Caporale, G.M.; Cipollini, A.; Spagnolo, N.
  • A new approach to measuring financial contagion
    Bae, K.; Karolyi, A.; Stulz, R.
  • Market efficiency around the clock some supporting evidence using foreign‐based derivatives
    Craig, A.; Dravid, A.; Richardson, M.
  • Contagion
    Edwards, S.
  • Financial market spillovers in transition economies
    Gelos, R.G.; Sahay, R.
  • Contagion in financial markets after September 11: myth or reality?
    Hon, M.T.; Strauss, J.; Yong, S.
  • Financial contagion on the international trade network
    Kali, R.; Reyes, J.
  • A spatial modelling approach to contagion among emerging economies
    Kelejian, H.H.; Tavlas, G.S.; Hondroyiannis, G.
  • Measuring financial contagion using time‐aligned data: the importance of the speed of transmission of shocks
    Kleimeier, S.; Lehnert, T.; Verschoor, W.F.C.
  • A primer on financial contagion
    Pericoli, M.; Sbracia, M.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off