CyberTech has drawn academic attention in the aftermath of the global financial crisis (GFC) as banks were forced to embrace CyberTech more aggressively to cope with market competition after the crisis. Banks can improve their operational efficiency and quality of service by relying on CyberTech, but they become more vulnerable to cybersecurity. Thus, increasing investment in CyberTech becomes a strategic necessity for banks to combat cybersecurity hazards. The study investigates how disruptive digital transformation affects bank stability. In particular, it examines whether the law of diminishing marginal returns from overspending on CyberTech affects bank stability. Based on a global sample from 43 countries, we find that an increase in CyberTech spending above the threshold level adversely affects the stability of banks. The main reason behind the adverse effect of CyberTech spending on the stability of banks is that banks take more than the proportional risk for every dollar they spend on disruptive CyberTech after they cross a threshold level of spending. While results persist across sub-samples, our results indicate two important channels of technological regimes - a diminishing returns regime and an increasing returns regime. The diminishing returns regime improves bank stability through more aggressive spending on technology, and the increasing returns regime makes banks more unstable due to excess spending on disruptive CyberTech. The study has implications for cybersecurity and sustainable CyberTech spending for banks.
In this paper, we analyze the connectedness between the recent spread of COVID-19, oil price volatility shock, the stock market, geopolitical risk and economic policy uncertainty in the US within a time-frequency framework. The coherence wavelet method and the wavelet-based Granger causality tests applied to US recent daily data unveil the unprecedented impact of COVID-19 and oil price shocks on the geopolitical risk levels, economic policy uncertainty and stock market volatility over the low frequency bands. The effect of the COVID-19 on the geopolitical risk substantially higher than on the US economic uncertainty. The COVID-19 risk is perceived differently over the short and the long-run and may be firstly viewed as an economic crisis. Our study offers several urgent prominent implications and endorsements for policymakers and asset managers.
COVID-19 has posed unprecedented challenges to global finances because of its unparalleled global scope, with both concomitant shocks as well as the likely altering of risk assessments and forecasts for the foreseeable future. As the effects of COVID-19 on financial markets and institutions have been widely addressed by various literature, we systematically synthesize this literature. Through a comprehensive search process, we extract and review 818 articles. Appling bibliometric methods, we explore the trends among various research constituents involved in the field. Using multi-dimensional scaling, we identify the intellectual structure of research in the domain and outline four distinct themes. We also identify the evolution and shifts in research within the short span of three years since the inception of COVID-19. Through detailed content analysis, various future research directions are proposed.
The sudden and rapid spread of the novel coronavirus (COVID-19) has had a severe impact on financial markets and economic activities all over the world. The purpose of this paper is to investigate the existence and intensity of financial contagion during the COVID-19 outbreak. We use daily series of stock indexes of 10 Asian countries (Taiwan, Hong Kong, Singapore, India, Indonesia, Malaysia, South Korea, Vietnam, Australia and China) and 4 American countries (the United-States, Brazil, Mexico, and Argentina) over the period starting from January 1st, 2014 to June 30th, 2021. Based on a copula approach, the results show that all studied markets are affected by the COVID-19 outbreak and the presence of financial contagion for all American and Asian countries. The results also show that contagion is more intense for American countries than Asian ones. These findings have practical implications, especially for investors, risk managers, and policy makers. The latter should continue to provide liquidity to the international market during this pandemic.