Research from University of Edinburgh Reveals New Findings on Risk Management (“Birds of a Feather” Fail Together: Exploring the Nature of Dependency…

Research from University of Edinburgh Reveals New Findings on Risk Management ("Birds of a Feather" Fail Together: Exploring the Nature of Dependency in SME Defaults)

By a News Reporter-Staff News Editor at Insurance Weekly News -- Researchers detail new data in Risk Management. According to news reporting out of Edinburgh, United Kingdom, by VerticalNews editors, research stated, "This article studies the effects of incorporating the interdependence among London small business defaults into a risk analysis framework using the data just before the financial crisis. We propose an extension from standard scoring models to take into account the spatial dimensions and the demographic characteristics of small and medium-sized enterprises (SMEs), such as legal form, industry sector, and number of employees."

Our news journalists obtained a quote from the research from the University of Edinburgh, "We estimate spatial probit models using different distance matrices based only on the spatial location or on an interaction between spatial locations and demographic characteristics. We find that the interdependence or contagion component defined on spatial and demographic characteristics is significant and that it improves the ability to predict defaults of non-start-ups in London. Furthermore, including contagion effects among SMEs alters the parameter estimates of risk determinants."

According to the news editors, the research concluded: "The approach can be extended to other risk analysis applications where spatial risk may incorporate correlation based on other aspects."

For more information on this research see: "Birds of a Feather" Fail Together: Exploring the Nature of Dependency in SME Defaults. Risk Analysis, 2017;():. (Wiley-Blackwell - www.wiley.com/; Risk Analysis - onlinelibrary.wiley.com/journal/10.1111/(ISSN)1539-6924)

Our news journalists report that additional information may be obtained by contacting R. Calabrese, University of Edinburgh Business School, Edinburgh, UK. Additional authors for this research include G. Andreeva and J. Ansell.

Keywords for this news article include: Europe, Edinburgh, United Kingdom, Risk Management.

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2017, NewsRx LLC