The Role of Media in the Credit Crunch: The Case of the Banking Sector

Wisniewski, Tomasz Piotr; Lambe, Brendan John

doi:10.2139/ssrn.1696105

Cited by 14 publications

(10 citation statements)

References 42 publications

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“…In part, this literature focuses upon recognised events such as sudden, unanticipated market turbulence occasioned by shocks to the financial system (Tetlock, 2007). In part, these types of studies are concerned with the communication of events through the print and electronic media where characterisation of their significance is as important as their measured incidence and effect (Wisniewski and Lambe, 2010). There is no doubt that events can prompt responses, although the effect of such events may be short-lived, especially if those events are quickly integrated into market trends and behaviour.…”

Section: Risk Preferences and Behaviourmentioning

confidence: 99%

Pension plan participant choice: Evidence on defined benefit and defined contribution preferences

Gerrans

Clark

2013

Journal of Pension Economics and Finance

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We report analysis of voluntary switching from defined benefit (DB) to defined contribution (DC) plans in an environment best characterised as benign. Using a large Australian fund database we identify socio-demographic correlates and the macroeconomic circumstances associated with DB to DC switching. The age of participants is an important correlate of switching behaviour, suggesting a degree of risk tolerance previously not recognised in the literature. It is also noted, however, that this type of switching behaviour may involve secondary behaviour such that uncertainties of DC investment performance are managed by reference to an asset allocation formula that maps to the previous DB investment strategy.

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Section: Risk Preferences and Behaviourmentioning

confidence: 99%

Pension plan participant choice: Evidence on defined benefit and defined contribution preferences

Gerrans

Clark

2013

Journal of Pension Economics and Finance

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“…Consequently, total retail funding fell by nearly £14 billion between December 2006 and December 2007. Wisniewski and Lambe (2013) show there was a strong causal relationship between the amount of negative news and the deteriorating situation in the UK, the US and Canada in terms of the financial stability of banks during the sub-prime mortgage crisis in 2007. By analyzing articles where crisis events were negatively characterized, the authors detected that pessimistic coverage led to further statistically significant reductions in the market value of bank equity, demonstrating that information covered in the media can impact the movements of stock prices.…”

Section: Media Freedom and Its Effects On Economic Agentsmentioning

confidence: 95%

“…Depositor behaviour is also likely to be affected by the media coverage of economic news. This can be especially important in crisis periods when depositors become even more sensitive to the information they face: the papers confirming the impact of media freedom on depositor strategies during crises include Wisniewski and Lambe (2013), Hasan et al (2013), Pyle et al (2012).…”

Section: Introductionmentioning

confidence: 99%

Bank Runs And Media Freedom: What You Don’t Know Won’t Hurt You?

Semenova¹,

Alexander

2021

SSRN Journal

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During periods of financial turmoil, depositor behaviour is influenced by the economic information environment, which is largely formed by the media-at least for retail depositors. Therefore the severity of bank runs during financial crises, and their efficiency might be conditional on the volume of the bad news appearing in the media during a crisis. If the news flow remains unrestrained, then the probability of bank runs will increase due to the information sensitivity of depositors. Examining whether it is possible to reduce the severity of bank runs during a crisis by controlling the media, we use the panel data 28 countries from 2001 until 2016. We analyze the impact of media freedom on the growth rate of retail deposits: the major role in bank runs is usually played by unsophisticated individual depositors. Generally the results do not support the hypothesis that changes in the degree of media freedom directly influence behavioural strategies of retail depositors during financial crises. However information limitations may be an instrument to support the market discipline mechanisms: higher media freedom during crises seems to blur the information environment depositors make decisions in. Media restrictions could also prevent the financial literacy effect from dilution during financial crises, ensuring that market discipline is not further undermined.

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“…But instead of using mood proxies, such as biorhythms or weather, we employ a direct measure of the bearish sentiment of investors. Finally, our article is also related to the recent study by Wisniewski and Lambe (), which examines the impact of negative media speculation on the performance of bank sector indices. In contrast to their article, we refine the notion of negative sentiment by analyzing crisis sentiment and concentrate on the consequences for individual insurers rather than the whole financial sector.…”

Section: Introductionmentioning

confidence: 98%

Crisis Sentiment in the U.S. Insurance Sector

Irresberger¹,

König²,

Weiß³

2016

J of Risk & Insurance

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We use Internet search volume data to measure idiosyncratic and market‐wide crisis sentiment to explain insurer stock return volatility. We find that market‐level crisis sentiment was a significant predictor of stock return volatility of U.S. insurers between 2006 and 2010. Higher levels of crisis sentiment are associated with higher levels of price uncertainty. This effect is strongest for insurers with less exposure to the adverse effects of the financial crisis. Further, crisis sentiment also affects the cross‐section of movements in insurer stock prices. Our results imply that investors exited insurer stocks mainly due to crisis sentiment rather than a rational assessment of the insurers’ actual exposure to the crisis.

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The Role of Media in the Credit Crunch: The Case of the Banking Sector

Cited by 14 publications

References 42 publications

Pension plan participant choice: Evidence on defined benefit and defined contribution preferences

Pension plan participant choice: Evidence on defined benefit and defined contribution preferences

Bank Runs And Media Freedom: What You Don’t Know Won’t Hurt You?

Crisis Sentiment in the U.S. Insurance Sector

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