Topic
Financial risk
About: Financial risk is a research topic. Over the lifetime, 11899 publications have been published within this topic receiving 231404 citations. The topic is also known as: economic risk.
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TL;DR: In this article, the authors investigate the impact of finance constraints on economic development in a large cross-country data set covering most of the European economy and find that the sensitivity of investment is lower in countries with better developed financial markets.
Abstract: We investigate financing constraints in a large cross-country data set covering most of the European economy. Firm level investment sensitivity to cash flow is used to identify financing constraints. We find that the sensitivities are significantly positive on average, controlling for country and industry fixed effects, as well as firm level controls. Most importantly, the cash flow sensitivity of investment is lower in countries with better-developed financial markets. This suggests that financial development may mitigate financial constraints. This effect is weaker in conglomerate subsidiaries, which are likely to have access to internal capital markets and depend less on the outside financial environment, and possibly for firms in industries with highly liquid assets as well. This result sheds light on the link between financial and economic development.
92 citations
TL;DR: The authors proposed a new approach that relates financial market volatility to firm specific credit risk and integrates interest rate, interest rate spread, and foreign exchange rate risk into one overall fixed income portfolio risk assessment.
Abstract: Current risk assessment methodologies separate the analysis of market and credit risk and thus misestimate security and portfolio risk levels. We propose a new approach that relates financial market volatility to firm specific credit risk and integrates interest rate, interest rate spread, and foreign exchange rate risk into one overall fixed income portfolio risk assessment. Accounting for the correlation between these significant risk factors as well as portfolio diversification results in improved risk measurement and management. The methodology is shown to produce reasonable credit transition probabilities, prices for bonds with credit risk, and portfolio value-at-risk measures.
92 citations
TL;DR: The authors explores the development of the Real Estate Investment Trust (REIT) market in Ireland as part of a wider effort to deleverage the country's failed banking sector and to attract global, yield-seeking capital into the moribund property market.
92 citations
TL;DR: In this article, the authors used an analytical method to separate generational, period, and aging effects on financial risk tolerance, and found that aging and period effects on risk tolerance were statistically significant.
Abstract: a b s t r a c t The importance of investment portfolio allocation has become more apparent since the onset of the late 2000s Great Recession. Individual willingness to take financial risks affects portfolio decisions and investment returns among other factors. Previous research found that people of different ages have dis- similar levels of risk tolerance but the effects of generation, period, and aging were confounded. Using the 1998-2007 Survey of Consumer Finances cross-sectional datasets, this study uses an analytical method to separate such effects on financial risk tolerance. Aging and period effects on financial risk tolerance were statistically significant. Implications for researchers and financial planning practitioners and educators are provided.
91 citations
91 citations