Significance of Controllable and Uncontrollable Drivers in Credit Defaults

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Economic Papers, ISSN: 1759-3441, Vol: 37, Issue: 1, Page: 30-41

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Shi, Lei; Allan, Neil; Evans, John; Yun, Yin
Economics, Econometrics and Finance
article description
The world economy has been shown to be a complex adaptive system with the consequence that companies within the global economy are constantly needing to react to influences from the activities of other companies with which they are interconnected and external influences. This paper uses a methodology developed for complex adaptive systems to analyse the characteristics of multiple credit default events in the United States, Europe and Asia over the period 1990–2010 to establish the significance of factors driving credit defaults. The analysis indicates that factors controllable by companies are more significant in the United States and Europe than uncontrollable events, but the reverse occurs in Asia.