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Article
Publication date: 6 March 2007

Prasanna Gai, Nigel Jenkinson and Sujit Kapadia

In recent years, the financial system has been changing rapidly. At the same time, macroeconomic volatility has fallen in developed countries. The purpose of this paper is to…

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Abstract

Purpose

In recent years, the financial system has been changing rapidly. At the same time, macroeconomic volatility has fallen in developed countries. The purpose of this paper is to examine how these developments may have affected the nature of systemic crises. The paper also aims to discuss how central banks and other financial regulators might respond to these developments with a clearer, more rigorous, operational framework for their systemic financial stability work.

Design/methodology/approach

The paper describes analytical models developed at the Bank of England to assess how recent developments may have affected the probability and potential impact of systemic financial crises. The results from these models help to shape the practical framework for the Bank's financial stability work.

Findings

The models suggest that financial innovation and integration, coupled with greater macroeconomic stability, have served to make systemic crises in developed countries less likely than in the past, but potentially more severe. Implementing a practical framework for financial stability work in response to this raises many formidable challenges.

Practical implications

If individuals are risk‐averse, the recent change in the profile of crises could lower welfare and would suggest that policymakers should place a higher premium on actions to monitor and mitigate systemic risk. The analysis also highlights the importance of differentiating the probability of risks from their potential impact.

Originality/value

The paper will be of interest to academics interested in systemic risk, central bankers, financial regulators, and financial market participants.

Details

The Journal of Risk Finance, vol. 8 no. 2
Type: Research Article
ISSN: 1526-5943

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Publication date: 19 October 2020

Pablo Estrada and Leonardo Sánchez-Aragón

Financial contagion refers to the propagation of shocks that can generate widespread failures. The authors apply a financial contagion model proposed by Elliott, Golub, and…

Abstract

Financial contagion refers to the propagation of shocks that can generate widespread failures. The authors apply a financial contagion model proposed by Elliott, Golub, and Jackson (2014) to a cross-shareholding network of firms in Ecuador. The authors use a novel dataset to study the potential channels for contagion. Although diversification is not high, results reveal enough conditions for a contagion event to occur. However, the low level of integration attenuates the effects of shocks. The authors run simulations affecting a particular firm at the time, and find that two firms coming from the finance and trade industry cause the highest contagion. In addition, when an entire industry receives a shock, trade and manufacturing industries contagion more companies than the rest. Finally, the model can assist policymakers to monitor the market and evaluate the fragility of the network in different scenarios.

Details

The Econometrics of Networks
Type: Book
ISBN: 978-1-83867-576-9

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Article
Publication date: 1 May 2005

Pratima Rao, Ramesh V. Bhat, R.V. Sudershan and T. Prasanna Krishna

In India, there are various religions and cultures. Several festivals are celebrated through the year, and a variety of specific foods are prepared for each of the festivals. The…

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Abstract

Purpose

In India, there are various religions and cultures. Several festivals are celebrated through the year, and a variety of specific foods are prepared for each of the festivals. The aim was to study the extent of consumption of colours during festivals.

Design/methodology/approach

A household survey was carried out in the urban areas of Hyderabad among individuals in the age groups 1‐5 years, 6‐18 years and >18 years from three socio‐economic groups – high, middle, and low income – from government quarters. The respondents of the study were interviewed using a food frequency questionnaire to elicit information on the intake of colours during festivals. The festivals selected for the study were Sankranthi, Diwali, Holi and Christmas.

Findings

The consumption pattern of various foods among all the subjects of the study during the four festivals indicated that a majority of the subjects (44 per cent) consumed sweetmeats. The intake of tartrazine and sunset yellow was observed to be higher during festivals due to the extensive use of these colours in sweetmeats, savouries and beverages that are most commonly available during festivals. The present investigation showed that there has been a shift in the preferences for foods during festivals (i.e. mainly sweetmeats and the type of colours consumed).

Originality/value

As there was an excessive consumption of yellow colours like tartrazine and sunset yellow and lesser consumption of red colours like ponceau 4R and carmoisine, the Indian government needs to take into consideration such situations when setting maximum permissible limits.

Details

British Food Journal, vol. 107 no. 5
Type: Research Article
ISSN: 0007-070X

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