University of Bath, Bath, BA1 3EL, England
A global pandemic is an infectious disease affecting many countries globally. While posting a serious health threat to all individuals, it also strikes the financial markets swiftly and broadly. This paper explores how a pandemic impacts banks' risk profile. A pandemic and its aftermath often claim hundreds of thousands of lives and cause unprecedented market movements. The paper illustrates the impact of a pandemic through a case study of Covid-19 by assessing the public information available of bulge bracket banks. The total risk exposures for the major bulge bracket banks have increased dramatically during the first quarter of 2020, and the increase is clearly linked to the pandemic outbreak. Banks have responded to the risk increase by transferring their risks, using hedging strategies, and asking for more collaterals. These insights can help risk professionals manage risks and better prepare for similar situations in the future.
Motivation, Research Approach , Risk, Financial, Global Corporate
Mengtian Li. The pandemic risk for financial services companies: A case study of Covid-19. The Frontiers of Society, Science and Technology (2020) Vol. 2 Issue 14: 133-146. https://doi.org/10.25236/FSST.2020.021417.
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