European Banking Distress and EMU: Institutional and Macroeconomic Risks.

Financial stability in Europe has received renewed attention with the advent of a common currency, wave of mergers and acquisitions among financial institutions, and greater market competition (e.g. ECB, 1999; IMF, 1999; OECD, 1999). This paper examines whether EU country banking systems are particularly vulnerable to systemic risk at present. Our approach is to examine episodes of banking sector distress for a large sample of countries, highlighting the experience of the EU. We estimate multivariate probit models linking the likelihood of banking problems to a set of macroeconomic variables and institutional characteristics. Institutional characteristics, made available by a new data set on corporate governance in the financial sector not previously used in this type of analysis, include aspects of bank supervision and regulation, restrictions on bank portfolios, and development of the banking system. Given these characteristics, the model predicts a low probability of banking sector distress in EMU countries.

Evaluating Resilience of Electricity Distribution Networks via A Modification of Generalized Benders Decomposition Method

This paper presents a computational approach to evaluate the resilience of electricity Distribution Networks (DNs) to cyber-physical failures. In our model, we consider an attacker who targets multiple DN components to maximize the loss of the DN operator. We consider two types of operator response: (i) Coordinated emergency response; (ii) Uncoordinated autonomous disconnects, which may lead to cascading failures. To evaluate resilience under response (i), we solve a Bilevel Mixed-Integer Second-Order Cone Program which is computationally challenging due to mixed-integer variables in the inner problem and non-convex constraints. Our solution approach is based on the Generalized Benders Decomposition method, which achieves a reasonable tradeoff between computational time and solution accuracy. Our approach involves modifying the Benders cut based on structural insights on power flow over radial DNs. We evaluate DN resilience under response (ii) by sequentially computing autonomous component disconnects due to operating bound violations resulting from the initial attack and the potential cascading failures. Our approach helps estimate the gain in resilience under response (i), relative to (ii)

Recessions and Financial Disruptions in Emerging Markets: A Bird´s Eye View.

This paper provides an overview of the implications of recession and financial disruption episodes in emerging markets. We report three major findings. First, compared to advanced countries, recessions and financial disruptions in emerging markets are often more costly. Second, recessions associated with financial disruption episodes, such as credit crunches, equity price busts and financial crises, tend to be deeper than other recessions in emerging markets. Third, the temporal dynamics of macroeconomic and financial variables around these episodes in emerging markets are different than those in advanced countries. In light of these broad observations, the paper provides a review of recessions and financial market disruptions in Chile

Continuity Culture: A Key Factor for Building Resilience and Sound Recovery Capabilities

This article investigates the extent to which Jordanian service organizations seek to establish continuity culture through testing, training, and updating of their business continuity plans. A survey strategy was adopted in this research. Primary and secondary data were used. Semistructured interviews were conducted with five senior managers from five large Jordanian service organizations registered with the Amman Stock Exchange. The selection of organizations was made on the basis of simple random sampling. Interviews targeted the headquarters only in order to obtain a homogenous sample. Three out of five organizations could be regarded as crisis prepared and have better chances for recovery. The other two organizations exhibited characteristics of standard practice that only emphasizes the recovery aspect of business continuity management (BCM), while paying less attention to establishing resilient cultures and embedding BCM. The findings reveal that the ability to recover following major incidents can be improved by embedding BCM in the culture of the organization and by making BCM an enterprise-wide process. This is one of few meticulous studies that have been undertaken in the Middle East and the first in Jordan to investigate the extent to which service organizations focus on embedding BCM in the organizational culture

Child maltreatment and autonomic nervous system reactivity: identifying dysregulated stress reactivity patterns by using the biopsychosocial model of challenge and threat.

ObjectiveDisruptions in stress response system development have been posited as mechanisms linking child maltreatment (CM) to psychopathology. Existing theories predict elevated sympathetic nervous system reactivity after CM, but evidence for this is inconsistent. We present a novel framework for conceptualizing stress reactivity after CM that uses the biopsychosocial model of challenge and threat. We predicted that in the context of a social-evaluative stressor, maltreated adolescents would exhibit a threat pattern of reactivity, involving sympathetic nervous system activation paired with elevated vascular resistance and blunted cardiac output (CO) reactivity.MethodsA sample of 168 adolescents (mean age =14.9 years) participated. Recruitment targeted maltreated adolescents; 38.2% were maltreated. Electrocardiogram, impedance cardiography, and blood pressure were acquired at rest and during an evaluated social stressor (Trier Social Stress Test). Pre-ejection period (PEP), CO, and total peripheral resistance reactivity were computed during task preparation, speech delivery, and verbal mental arithmetic. Internalizing and externalizing symptoms were assessed.ResultsMaltreatment was unrelated to PEP reactivity during preparation or speech, but maltreated adolescents had reduced PEP reactivity during math. Maltreatment exposure (F(1,145) = 3.8-9.4, p = .053-<.001) and severity (β = -0.10-0.12, p = .030-.007) were associated with significantly reduced CO reactivity during all components of the stress task and marginally associated with elevated total peripheral resistance reactivity (F(1,145) = 3.8-9.4; p = .053-<.001 [β = 0.07-0.11] and p = .11-.009, respectively). Threat reactivity was positively associated with externalizing symptoms.ConclusionsCM is associated with a dysregulated pattern of physiological reactivity consistent with theoretical conceptualizations of threat but not previously examined in relation to maltreatment, suggesting a more nuanced pattern of stress reactivity than predicted by current theoretical models

Adapting the community sector for climate extremes

Abstract People experiencing poverty and inequality will be affected first and worst by the impacts of climate change to infrastructure and human settlements, including those caused by increasingly frequent and intense extreme weather events and natural disasters. They have the least capacity to cope, to adapt, to move and to recover. Community service organisations (CSOs) play a critical role in supporting individuals, families and communities experiencing poverty and inequality to build resilience and respond to adverse changes in circumstances. As such, the services they provide comprise a critical component of social infrastructure in human settlements. However, very little is understood about CSOs own vulnerability to – or their role in managing and mitigating risks to their clients and the community from – climate change impacts to physical infrastructure. The Extreme Weather, Climate Change and the Community Sector – Risks and Adaptations project examined the relationship between physical and social infrastructure (in the form of CSO service provision). Specifically, the ways in which the climate-driven failure of CSO service delivery worsens risks to the individuals and communities they serve and, on the other hand, how preparedness may reduce vulnerability to climate change and extreme weather impacts to human settlements and infrastructure.The research comprised a comprehensive and critical scoping, examination and review of existing research findings and an audit, examination and judgment-based evaluation of the current vulnerabilities and capacities of CSOs under projected climate change scenarios. It employed three key methods of consultation and data collection. A literature review examined research conducted to date in Australia and comparative countries internationally on the vulnerability and climate change adaptation needs of CSOs. A program of 10 Community Sector Professional Climate Workshops consulted over 150 CSO representatives to develop a qualitative record of extreme event and climate change risks and corresponding adaptation strategies specific to CSOs. A national survey of CSOs, which resulted in the participation of approximately 500 organisations, produced a quantitative data set about the nature of CSO vulnerability to climate change and extreme weather impacts to infrastructure, whether and how CSOs are approaching the adaptation task and key barriers to adaptation.While the methods employed and the absence of empirical data sets quantifying CSO vulnerability to climate change impacts create limitations to the evidence-base produced, findings from the research suggest that CSOs are highly vulnerable and not well prepared to respond to climate change and extreme weather impacts to physical infrastructure and that this underlying organisational vulnerability worsens the vulnerability of people experiencing poverty and inequality to climate change. However, the project results indicate that if well adapted, CSOs have the willingness, specialist skills, assets and capacity to make a major contribution to the resilience and adaptive capacity of their clients and the community more broadly (sections of which will be plunged into adversity by extreme events). Despite this willingness, the evidence presented shows that few CSOs have undertaken significant action to prepare for climate change and worsening extreme weather events. Key barriers to adaptation identified through the research are inadequate financial resources, lack of institutionalised knowledge and skills for adaptation and the belief that climate change adaptation is beyond the scope of CSOs core business. On the other hand, key indicators of organisational resilience to climate change and extreme weather impacts include: level of knowledge about extreme weather risks, past experience of an extreme weather event and organisational size.Given its size, scope and the critical role the Australian community sector plays in building client and community resilience and in assisting communities to respond to and recover from the devastating impacts of extreme weather events and natural disasters, the research identifies serious gaps in both the policy frameworks and the research base required to ensure the sector’s resilience and adaptive capacity – gaps which appear to have already had serious consequences. To address these gaps, a series of recommendations has been prepared to enable the development and implementation of a comprehensive, sector-specific adaptation and preparedness program, which includes mechanisms to institutionalise knowledge and skills, streamlined tools appropriate to the needs and capacity of a diverse range of organisations and a benchmarking system to allow progress towards resilience and preparedness to be monitored. Future research priorities for adaptation in this sector have also been identified

Managing Operational Risk in Payment, Clearing, and Settlement Systems

Awareness of operational risk has increased greatly in recent years, both at individual financial institutions and for payment, clearing, and settlement systems (PCSS). PCSS consist of networks of interconnected elements (i.e., central operators, participants, and settlement agents); operational problems at any one of the key elements have the potential to disrupt the system as a whole and negatively affect financial stability. The author describes the key features of systemically important PCSS in Canada and the oversight role of the Bank of Canada with respect to those systems. She also describes one approach that could be used to assess and manage operational risk in Canadian PCSS. This approach relies on a consistent definition of operational risk that can be applied across all elements of a PCSS. It uses a recent methodology adapted from the management of operational risk at individual financial institutions. This methodology, called the loss-distribution approach, assesses risk in terms of the potential outcomes of operational events owing to certain risk factors (such as systems problems, human error, process problems, and external events), their likelihood, and their frequency. Once operational risk databases are developed that record the frequency and severity of operational events, it will be possible to estimate parts of the loss distributions for PCSS. In the meantime, qualitative analysis provided by operations experts associated with the various elements of PCSS will be important for judging the potential impact and frequency of events. In a changing financial environment, it is hoped that this methodology could be used to supplement core aspects of operational risk management, such as sound corporate governance, internal controls, policies and procedures, knowledgeable people, and robust contingency plans.Financial institutions; Payments, clearing and settlements systems

Credit, Profitability and Instability: A Strictly Structural Approach

This paper offers a purely structural characterisation of the content, limits and contradictions of credit relations in capitalist accumulation. Considering steady-state evolutions and step-change perturbations in a dynamic model of the Marxian circuit of capital, it establishes that sustained paces of net credit extension may boost aggregate profitability, the rate of accumulation, and the aggregate financial robustness of capitalist enterprises. These gains are limited by the economy’s dynamic productive capacities, and tempered by the risks of credit and monetary disruptions created payment obligations established by credit. Economies with higher paces of net credit extension are shown to be more vulnerable to the disruptions to accumulation variously emphasised by Marxian, Keynesian and Post-Keynesian contributions.

Enabling Entrepreneurial Ecosystems

Inspired by research on the importance of entrepreneurship for sustained economic growth and improved wellbeing, many governments and non-governmental grantmaking organizations have sought over the past decade to implement policies and programs intended to support entrepreneurs. Over this interval, growing appreciation of the limits of strategies focused narrowly on financing or training entrepreneurs has prompted a number of such entities to shift their efforts toward more broadbased strategies aimed at enabling "entrepreneurial ecosystems" at the city or sub-national regional scale.This paper takes the metaphor of the "ecosystem" seriously, seeking to draw lessons from evolutionary biology and ecology to inform policy for entrepreneurship. In so doing, the paper provides a framework for data gathering and analysis of practical value in assessing the vibrancy of entrepreneurial ecosystems