What is it about?
This paper introduces statistical models Wordscores and Wordfish to study and predict banking crises. While Wordscores is akin to supervised learning, Wordfish is analogous to unsupervised learning.
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Why is it important?
Findings suggest that the two statistical methods signal banking crisis up to two-years in advance.
Perspectives
Given their early warning signals, both Wordscores and Wordfish can be considered a part of the toolset to monitor the stability and resilience of the banking sector.
Emile du Plessis
University of Hamburg
Read the Original
This page is a summary of: Can Text-Based Statistical Models Reveal Impending Banking Crises?, Computational Economics, April 2024, Springer Science + Business Media,
DOI: 10.1007/s10614-024-10594-5.
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