Likely winners and losers in upcoming COVID-19 economic crisis – lessons learned from the GFC

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jan Čadil ◽  
Marek Beránek ◽  
Vladimír Kovář
Keyword(s):  
Global Financial Crisis ◽  
Recovery Phase ◽  
Lessons Learned ◽  
Government Support ◽  
Economic Downturn ◽  
External Shocks ◽  
Content Type ◽  
Shock Impact ◽  
The Global Financial Crisis ◽  
The Impact

Purpose The COVID-19 pandemic and subsequent efforts to contain it have started economic downturn that may even surpass the global financial crisis (GFC). The purpose of this study is to uncover the features of enterprises’ resilience during and after an external shock such as the GFC might be helpful in predicting the shock impact on enterprises and setting proper policy measures for the upcoming COVID-19 crisis. Design/methodology/approach The authors analysed the impact of the GFC on the entrepreneurial population in/of the Czech Republic using marginal effects method on a large random sample of 4,478 enterprises. In this analysis, the authors defined two groups of enterprises – “winners” and “losers” – based on the company’s dissolution and performance indicators. Findings The GFC struck the enterprise population asymmetrically in terms of the enterprises’ characteristics but also in terms of time. Micro and small size companies are the most vulnerable to external shocks such as the GFC. Technological level plays an important role in the recovery phase, especially in the case of manufacturing micro enterprises. Research limitations/implications Although there are differences between the GFC and the COVID-19 crisis, the GFC was the only comparable shock in modern history in its global nature, depth and unpredicted occurrence. It can be expected that the impact on enterprises can be partly similar. Practical implications Government support of micro size companies should be the priority in the upcoming COVID-19 crisis. Supporting the innovation and technology progress might accelerate the recovery phase after the crisis especially in micro companies as well. Originality/value This paper presents interesting insights into the impact of external shocks such as the GFC or COVID-19 on enterprises. It uncovers typical features of “winners” or “losers” of such shocks.

Employment performance in times of crisis

2015 ◽  
Vol 25 (4) ◽  
pp. 371-391 ◽  
Author(s):  
Julian Kahl ◽  
Christian Hundt
Keyword(s):  
Firm Growth ◽  
Global Financial Crisis ◽  
Linear Regression Analysis ◽  
Economic Benefits ◽  
Levels Of Analysis ◽  
External Shocks ◽  
Economic Resilience ◽  
Content Type ◽  
Regional Clusters ◽  
The Impact

Purpose – The purpose of this study is to elucidate the determinants of economic resilience at various levels of analysis. While the economic benefits of regional clustering are well-documented, the impact of external shocks on regional clusters has only recently gained attention. This study explores the antecedents of economic resilience, defined as sustained employment growth, prior to and during the global financial crisis within the German biotechnology industry. Design/methodology/approach – This study combines multilevel linear regression analysis with egocentric network analysis. This allows us to distinguish micro- and context-level effects in the analysis of economic resilience. Findings – The findings of this study indicate that while specialization at the network and context-level is conducive to firm growth prior to the crisis, these configurations seem to be particularly susceptible to external shocks. Conversely, diversity (diversified regional agglomerations and diverse networks) seems to be associated with economic resilience during the crisis. Moreover, we find that economic resilience is connected to adaptive capability at the micro-level, that is, the ability to expand and diversify a firms’ portfolio of network ties in the face of an external shock. Finally, we show that these adaptive processes are facilitated by geographical proximity among collaborating organizations. Originality/value – This study contributes to the existing literature by showing that the antecedents of economic resilience are located at multiple levels of analysis. An important implication of this study is that the examination of the resilience of regional clusters may thus be significantly enhanced by disentangling effects at the firm, network and regional (i.e. context) level.

scholarly journals Alternative measures for predicting financial distress in the case of Malaysian Islamic banks: assessing the impact of global financial crisis

2020 ◽  
Vol 11 (9) ◽  
pp. 1827-1845
Author(s):  
Mehmet Asutay ◽  
Jaizah Othman
Keyword(s):  
Financial Crisis ◽  
Financial Distress ◽  
Global Financial Crisis ◽  
Islamic Banks ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Explanatory Variables ◽  
Alternative Funding ◽  
The Global Financial Crisis ◽  
The Impact

Purpose The global financial crisis of 2008 still has an impact on the financial systems around the world, for which funding liquidity has been mentioned as one of the main concerns during that period. This study aims to consider the impact of and extent to which the funding structure of Islamic banks along with deposit structure, macroeconomic variables, other bank-specific variables, including alternative funding mix variables (in terms of funding structure measured as financing/deposit ratio), could play a part in explaining the financial conditions and predicting the failures and performances of Islamic banks in the case of Malaysia under the distress created by the global financial crisis. Design/methodology/approach Multivariate logit model was used with a sample including 17 full-fledged Islamic banks in Malaysia for the period from December 2005 to September 2010 by using quarterly data. Findings This study found that the funding mix variable (financing/deposit ratio), the composition of deposits, alternative bank-specific variables and alternative funding mix variables are statistically significant. In contrast, none of the macroeconomic variables is found to have a significant impact on bank liquidity. In the final models, the variables that showed significant performance were selected as explanatory variables. The results of McFadden R-squared for both selected models showed an excellent fit to predict the Islamic banks’ performance. Originality/value This empirical study contributes to the literature in two ways: to the best of the authors’ knowledge, this is the first study to examine the role of the funding structures of Islamic banks in determining their performance; and it also examines the effect of deposit composition (the mudharabah and non-mudharabah deposits) on Islamic banks’ performance.

scholarly journals Economic Resilience: What Role for Policies?

2016 ◽  
Vol 07 (02) ◽  
pp. 1650009 ◽  
Author(s):  
Aida Caldera Sánchez ◽  
Morten Rasmussen ◽  
Oliver Röhn
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Economic Resilience ◽  
Trade Offs ◽  
Shock Impact ◽  
The Global Financial Crisis ◽  
The Impact

The global financial crisis highlighted the importance of strengthening the resilience of our economies to adverse shocks. In this paper, we take stock of studies carried out primarily within, but also outside the OECD, to better understand the role of macroeconomic and structural policies in spurring or mitigating the vulnerabilities that can lead to costly shocks, as well as the role of policies in mitigating the shock impact and speeding the recovery. Then we offer tentative insights on how policies can be geared to address vulnerabilities early on, mitigate the impact of shocks and speed recoveries, as well as highlight possible trade-offs that exist across policy areas.

Money laundering and financial stability: does adverse publicity matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bahriye Basaran-Brooks
Keyword(s):  
Money Laundering ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Banking System ◽  
Public Confidence ◽  
Content Type ◽  
Reputational Risk ◽  
The Global Financial Crisis ◽  
The Impact

Purpose Already suffering reputational damage from the global financial crisis, banks face a further loss of trust due to their poor money laundering (ML) compliance practices. As confidence-driven institutions, the loss of reputation stemming from inadequate compliance with regulations and policies labels banks as facilitators of crime and destroys public trust both in the bank itself, peer banks and the wider banking system. Considering the links between financial stability and adverse publicity about banks, this paper aims to critically examine the implications of ML-specific bank information on financial stability. Design/methodology/approach This paper adopts a content analysis and a theoretical discussion by critically evaluating the role of bank compliance information on stability with references to recent case studies. Findings This paper establishes that availability of information regarding a bank involved in or facilitating ML might pose a threat to financial stability if bank counterparties cut their ties with the bank in question and when bank stakeholders show a strong and sudden negative reaction to adverse publicity. Though recent ML scandals have not caused immediate instability, general loss of confidence associated with reputational risk have had a destabilising effect on affected banks’ capital and liquidity. Originality/value There has been surprisingly little discussion to date on the impact of publicly available bank information on financial stability and public confidence within the ML compliance framework. This paper approaches the issue of publicly available banking compliance information solely through the prism of public confidence and reputational risk and its impact on macro-stability by examining recent ML scandals.

Managing risk in mergers and acquisitions activity: beyond ‘good’ and ‘bad’ management

2015 ◽  
Vol 30 (2) ◽  
pp. 160-175 ◽  
Author(s):  
Alnoor Bhimani ◽  
Mthuli Ncube ◽  
Prabhu Sivabalan
Keyword(s):  
Risk Management ◽  
Management Practices ◽  
Global Financial Crisis ◽  
Management Strategies ◽  
Future Research ◽  
Agency Conflicts ◽  
Complex Behaviour ◽  
Content Type ◽  
The Global Financial Crisis ◽  
The Impact

Purpose – This paper aims to assess the impact of the presence/absence of risk management practices on the risk of merger and acquisition (M&A) failure. Design/methodology/approach – An agency theoretic perspective is adopted, along with a mixed-methods approach to study managerial complexity beyond simply “good” and “bad”. The focus is on an agency conflicts. Findings – The authors first present an integrated framework that classifies managerial behaviour and risk management, where M&A bids can become vehicles for maximising managerial benefits rather than shareholder value. The authors proceed to consider M&A activity that benefits both managers and shareholders in the presence of risk management strategies. Research limitations/implications – The paper highlights the benefits of multiple paradigms and research paths that address dimensions captured by an agency theoretic perspective. Practical implications – The authors regard this paper as having particular significance in that the global financial crisis has impacted M&A activities and objectives, shifting the employment and related risks faced by managers. Originality/value – The paper suggests future research paths to advance the understanding of the complex behaviour of managers involved in M&A activities that go beyond the classification of “good” and “bad” managers.

scholarly journals Investigating dynamic capabilities, agility and knowledge management within EMNEs-longitudinal evidence from Europe

2019 ◽  
Vol 23 (9) ◽  
pp. 1708-1728 ◽  
Author(s):  
Vijay Pereira ◽  
Kamel Mellahi ◽  
Yama Temouri ◽  
Swetketu Patnaik ◽  
Mohammad Roohanifar
Keyword(s):  
Knowledge Management ◽  
Dynamic Capabilities ◽  
Global Financial Crisis ◽  
Emerging Market ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Technological Performance ◽  
The Global Financial Crisis ◽  
The Uk ◽  
The Impact

Purpose This paper aims to analyse the impact of dynamic capability (DC) of emerging market multinationals (EMNEs) on their firm technological performance by teasing out the concepts of agility and knowledge management (KM) through DC. Design/methodology/approach Evidence from this study is contextualised on EMNEs that operate in the UK, Germany and France. This study examines the investment in intangible assets which EMNEs use to develop their DC over the period 2005-2016 and how this leads to increased firm technological performance. Findings Results show that higher investments in DC allow EMNEs to be more agile and gain competencies through KM and thereby sustain competitiveness in the three leading European countries. This research also identifies which EMNE groupings show greater technological performance and how such EMNE groupings are able to translate dynamic capabilities into greater technological performance compared to others over time. In summary, the role of DC during of the global financial crisis was also examined, where they are required to be more agile. Originality/value This paper sheds light on a novel way and motivation of successful EMNEs in using developed host countries as a location for generating DC through agility and KM.

scholarly journals Shareholder empowerment, steps forward and steps back

2019 ◽  
Vol 27 (2) ◽  
pp. 169-196
Author(s):  
Saad Almohammed Alrayes
Keyword(s):  
Global Financial Crisis ◽  
Effective Means ◽  
Fiduciary Duty ◽  
Content Type ◽  
Shareholder Engagement ◽  
The Usa ◽  
The Global Financial Crisis ◽  
The Uk ◽  
The Impact

Purpose The global financial crisis of 2007-2008 prompted a significant debate on corporate governance and shareholder empowerment. A question arises as to whether shareholders ought to be further empowered to have a greater influence over the companies’ activities. Yet, it is not self-evident that shareholder empowerment ensures better-run companies’ corporate activities. Thus, the purpose of this paper is to critically examine, identify and explain the corporate regulation forms and control collectively to evaluate the effectiveness of shareholder empowerment fully. Design/methodology/approach To do so, this paper sets out a comparative analysis approach between two jurisdictions, the UK and Delaware in the USA. The paper further addresses by undertaking three case studies; Barclays Plc which illustrated the Comply or Explain role, AVIVA (2012) that concentrated on the impact of the shareholder revolt, and the case of Hills Stores Co. v. Bozic (2000), which involved a claim brought by shareholders on the grounds of a breach of fiduciary duty. Findings This paper argues that the shareholder empowerment theoretically provides an effective means through which corporate activities can be regulated. However, to do this, account must be taken that a distinction should be made between long-term and short-term investors to encourage shareholder engagement by responsible long-term investors. Furthermore, the shareholders can exercise their powers effectively and influence the Board’s decision to award executive compensation. Originality/value This paper offered two distinct contributions: assessing whether in times of crisis shareholder empowerment represents a way to regulate corporate activities and by assessing the distinction between the perception of shareholder empowerment and the reality in practice.

The effects of the global financial crisis on the capital structure of EPRA/NAREIT Europe index companies

2015 ◽  
Vol 8 (1) ◽  
pp. 3-23 ◽  
Author(s):  
Giacomo Morri ◽  
Andrea Artegiani
Keyword(s):  
Financial Crisis ◽  
Real Estate ◽  
Capital Structure ◽  
Global Financial Crisis ◽  
Pecking Order ◽  
Trade Off ◽  
Content Type ◽  
The Global Financial Crisis ◽  
The Impact ◽  
The Capital Structure

Purpose – The purpose of this paper is to test whether the financial crisis has affected the capital structure of real estate companies in Europe and whether these impacts can be studied utilizing the variables traditionally used by the trade-off and pecking-order theories to explain the capital structure of companies. Design/methodology/approach – The study uses a fixed-effect panel regression analysis and a sample composed of companies included in the EPRA/NAREIT Europe Index. The effect of the financial crisis has been accounted for within the model by means of a dummy variable. Findings – The global financial crisis did have an impact on the capital structure of companies and the main variables traditionally used by the trade-off and pecking order theories proved to be suitable in explaining the capital structure of real estate companies. Real estate investment trusts are, on average, more leveraged than traditional real estate companies due to their special regulatory status. Research limitations/implications – The study is limited to the European market and UK companies in particular account for a large part of the sample. In addition, major regulatory differences between the various European countries are not taken into account in the model. Originality/value – Similar studies have been performed for the US and Australian market. However, the impact of the global financial crisis has not been traditionally considered in these studies.

The impact of the global financial crisis on audit and non-audit fees

2015 ◽  
Vol 30 (4/5) ◽  
pp. 302-323 ◽  
Author(s):  
Irina Alexeyeva ◽  
Tobias Svanström
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Audit Fees ◽  
Return On Assets ◽  
Public Companies ◽  
Content Type ◽  
Audit Firms ◽  
The Global Financial Crisis ◽  
The Impact ◽  
Non Audit Services

Purpose – The paper aims to investigate audit and non-audit fees during the global financial crisis (GFC) in an environment that is relatively sparsely regulated with regard to the provision of non-audit services. Design/methodology/approach – Audit and non-audit fees were studied during pre-GFC (2006-2007), GFC (2008-2009) and post-GFC (2010-2011) periods. Findings – During the GFC, Swedish companies benefited from an increase in sales and total assets, although return on assets decreased. In this setting, the auditors charged higher audit fees compared with the pre-GFC period, despite the absence of increased audit reporting lags. A significant increase in audit fees continued during the post-crisis periods with auditors paying more attention to companies’ leverage and whether they report losses. At the same time, the companies spent less on non-audit services. Research limitations/implications – This study is limited to companies from Sweden, which was less affected by the GFC. Practical implications – GFC auditors are able to charge higher audit fees to public companies including those that are well-performing during financial crises, and they are also able to increase the audit fees in the post-crisis period. This implies that auditors put in extra audit effort to compensate for higher risk, or that they are good at negotiating prices with their clients. However, non-audit fees decreased during the same period, implying that the demand for these services drops under financial instability. Originality/value – The study highlights auditors’ behavior in the liberal economic environment and it studies both audit fees and non-audit fees before GFC, during GFC and after the GFC. The GFC appears to have provided audit firms the opportunity to extract higher audit fees. Our findings are of interest to managers, auditors and regulators.

Income return versus capital appraisal for real estate funds during the financial crisis

2015 ◽  
Vol 10 (1) ◽  
pp. 66-79
Author(s):  
Gianluca Mattarocci ◽  
Georgios Siligardos
Keyword(s):  
Financial Crisis ◽  
Real Estate ◽  
Global Financial Crisis ◽  
Capital Gains ◽  
Annual Reports ◽  
Content Type ◽  
Income Sources ◽  
Overall Performance ◽  
The Global Financial Crisis ◽  
The Impact

Purpose – The overall performance of real estate funds can be ascribed to capital appreciation and/or income return. The Italian property funds market has grown significantly over the past few years; however, little is known about the key drivers of property fund performance. The purpose of this paper is to measure the impact of two sources of funds’ performance and identify their relevance during the financial crisis. Design/methodology/approach – The paper considers the Italian market in the last decade and analyses the annual reports of public real estate funds, separating appraisal returns from income returns. By considering a wide time horizon, it evaluates if the roles of income returns and capital gains with respect to overall performance are more or less influenced by fund characteristics, such as asset diversification, concentration, and leverage. Findings – The contribution of income return and capital growth are not strictly related to the overall performance of Italian real estate funds, with a significantly lower correlation during the global financial crisis. Furthermore, the main drivers of the two income sources are not strictly comparable. Originality/value – The paper presents the first analysis on the source of income return for the Italian real estate funds and it represents one of the few studies that considers the effect of the financial crisis on European indirect real estate investments, capital appreciation and income return.

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