ECB paper analyses financial crisis contagion
Crisis in one region can trigger more as investors reassess other markets, researchers say
A working paper published by the European Central Bank investigates the theoretical reasons why a financial crisis in one region can lead to crises elsewhere.
In A wake-up call theory of contagion, Toni Ahnert and Christoph Bertsch build on Morris Goldstein’s 1998 paper analysing the Asian financial crisis. They say Goldstein’s paper introduced the idea that a financial crisis in one region could make investors “re-assess and inquire about the fundamentals of other regions”.
The authors
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