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.

Gender Jeopardy in Financial Risk Taking

Abstract: This article examines the joint effect of issue capability and gender on risk taking. Across three studies, the authors show that the effect of issue capability is moderated by gender, depending on the compatibility between the goal orientation of the decision maker and the nature of the decision task. For decisions that are mainly driven by achievement of gains (e.g., investment decisions), men’s risk-taking propensity is more influenced by their levels of issue capability than women’s because the nature of the decision task is consistent with men’s agentic orientation focused on the self. Conversely, for decisions that are mainly driven by avoidance of losses (e.g., insurance decisions), women’s risk taking is more sensitive to issue capability than men’s because the nature of such decisions is consistent with women’s communion orientation. The authors analyze the betting data from the Daily Double in the Jeopardy! game show (Study 1). The results show that gender moderates the effect of issue capability on the actual betting behavior in Jeopardy! In Study 2, the authors test the underlying mechanism through mediation analyses of the focus of attention. In Study 3, the authors manipulate the task nature and demonstrate that men’s risk taking is more sensitive to issue capability in investment decisions, whereas women’s risk taking is more sensitive to issue capability in insurance decisions.

Let’s talk about the weather: the impact of climate change on central banks

Abstract: This paper examines the channels via which climate change and policies to mitigate it could affect a central bank’s ability to meet its monetary and financial stability objectives. We argue that two types of risks are particularly relevant for central banks. First, a weather-related natural disaster could trigger financial and macroeconomic instability if it severely damages the balance sheets of households, corporates, banks, and insurers (physical risks). Second, a sudden, unexpected tightening of carbon emission policies could lead to a disorderly re-pricing of carbon-intensive assets and a negative supply shock (transition risks). Climate-related disclosure could facilitate an orderly transition to a low-carbon economy if it helps a wide range of investors better assess their financial risk exposures.

Multidimensional Facets of Perceived Risk in Mobile Travel Booking

Abstract: Despite the growing prevalence of smartphones in daily life and travel context, travellers still perceive an extent of risk associated with using their smartphone to book travel products In order to alleviate or reduce perceived risk, it is important to better understand the dimensions of and the factors that contribute to perceived risk This study analysed 411 responses from an online panel to examine perceived risk in mobile travel booking and identified the following facets: time risk, financial risk, performance risk, privacy/security risk, psychological risk, physical risk, and device risk Several antecedents of perceived risk were identified Perceived collection of personal information via smartphones contributes positively, while consumer innovativeness, trust, and visibility contribute negatively to perceived risk Further, the predictive validity of perceived risk is confirmed as it significantly explains perceived usefulness, attitude, and behavioural intention in mobile travel booking Implications to manage perceived risk and its antecedents are provided

Financial Globalization: Gain and Pain for Developing Countries

Abstract: This paper discusses the benefits and risks that financial globalization entails for developing countries. Financial globalization can lead to large benefits, particularly to the development of the financial system. But financial globalization can also come with crises and contagion. The net effect of financial globalization is likely positive in the long run, with risks being more prevalent right after countries liberalize. So far, only some countries, sectors, and firms have taken advantage of globalization. As financial systems turn global, governments lose policy instruments, so there is an increasing scope for some form of international financial policy cooperation.

Common Risk Factors in the Cross-Section of Corporate Bond Returns

Abstract: We investigate the cross-sectional determinants of corporate bonds and find that downside risk is the strongest predictor of future bond returns. We also introduce common risk factors based on the prevalent risk characteristics of corporate bonds – downside risk, credit risk, and liquidity risk – and find that these novel bond market factors have economically and statistically significant risk premia, which cannot be explained by the long-established stock and bond market factors. We further show that these newly proposed risk factors outperform all other models considered in the literature in explaining the returns of the industry-sorted and size/maturity-sorted portfolios of corporate bonds.