Contact Us

For Marketing, Sales and Subscriptions Inquiries
2637 E Atlantic Blvd #43110
Pompano Beach, FL 33062

Conference List

Journal of Empirical Studies

June 2018, Volume 5, 1, pp 20-44

Leading Indicators and Financial Crisis: A Multi-Sectoral Approach Using Signal Extraction

Mpho Bosupeng

Mpho Bosupeng 1

  1. Newcastle Business School, The University of Newcastle, 409 Hunter Street, Newcastle, NSW 2300, Australia 1

on Google Scholar
on PubMed

Pages: 20-44

DOI: 10.18488/journal.66.2018.51.20.44

Share :

Article History:

Received: 15 October, 2018
Revised: 21 November, 2018
Accepted: 24 December, 2018
Published: 02 January, 2019


Using signal extraction, this study identifies leading indicators of financial crisis over the period 1980-2015 in developing and advanced economies. The study evaluates vulnerability in the external, public and financial sector in developing countries. The results postulate that the level of imports is the principal leading indicator for detecting a forthcoming crisis in developing nation’s external sector. In the public sector, the best indicators for predicting a crisis in South Africa are in the order: maturity of debt; external debt; debt-GDP ratio; interest rate payments; short-term debt and government expenditure. In Namibia, the best indicator for predicting crisis is total expenditure and interest rate payments. Comparatively, Russia’s crises are better predicted by the following variables: debt ratio; interest rate payments; short-term debt; expenditure and external debt. The two best indicators were debt ratio and interest rate payments. In the financial sector, the common risk indicator among developing economies is the lending rate. The external balance sheet assessment shows that in developed countries, predictors of a financial emanate from portfolio investments and direct investments. For the UK, the best indicators of a looming financial crisis are: direct investment liabilities; portfolio debt liabilities and direct investment debt instruments.
Contribution/ Originality
This study is one of the first contributions in early warning systems that assesses vulnerability in multiple sectors of an economy which are external, public and financial sectors. To the best of the author’s knowledge, this study is also the first to determine external balance sheet assessment in developed nations.


Signal extraction, Financial crisis, Threshold, Indicator.



Google Scholor ideas Microsoft Academic Search bing Google Scholor


This study received no specific financial support.

Competing Interests:

The author declares that there are no conflicts of interests regarding the publication of this paper.


Related Article

( 1 ) Leading Indicators and Financial Crisis: A Multi-Sectoral Approach Using Signal Extraction
( 2 ) The Impact of Economic Growth, Oil Price, and Financial Globalization Uncertainty on Financial Development: Evidence from Selected Leading African Countries
( 3 ) Macroeconomic Indicators and Capital Formation Growth in Nigeria: A New Evidence
( 5 ) World Governance Indicators and Fraud: Evidence from One Belt One Road Countries
( 6 ) Gaining Trust After the Financial Crisis in the Nigerian Economy: A Conceptual Framework
( 7 ) Financial Integration and International Risk Diversification
( 8 ) Teachers Characteristics and Students’ Performance Level in Senior Secondary School Financial Accounting
( 9 ) The Nexus between Financial Crisis and Household Consumption: Evidence from Emerging Countries
( 10 ) Relationships between Financial Development and Economic Growth: A New Approach by Inputs
( 11 ) The Impact of Dividend Policy on Shareholders’ Wealth before and After Financial Melt down: Evidence from FMCG Sector in India
( 12 ) The Effect of Selected Financial Ratios on Profitability: An Empirical Analysis of Listed Firms of Cement Sector in Saudi Arabia
( 13 ) Stock Market Index Prediction with Neural Network during Financial Crises: A Review on Bist-100
( 14 ) The Effects of Changes in Accounting Standards on Value Relevance of Financial Statement Information of Malaysia and Nigeria Banks
( 15 ) The Impact of the Global Financial Crisis on the Debt, Liquidity, Growth, and Volume of Companies in Palestine Stock Exchange
( 16 ) Managerial Judgement Versus Financial Techniques in Strategic Investment Decisions: An Empirical Study on the Syrian Coastal Region Firms
( 17 ) Financial Deepening, Interest Rate Spread and Economic Growth: New Evidence from Sub-Sahara Africa
( 18 ) Financial Tables Reports Gaps in Jordanian Islamic Banks
( 19 ) Effects of Corporate Social Responsibility on Banks Financial Performance in Nigeria: A Study of United Bank of Africa
( 20 ) Financial Market Predictions with Factorization Machines: Trading the Opening Hour Based on Overnight Social Media Data
( 22 ) Correlation between Financial Difficulties and Financing Strategies among Market Stallholders in Batangas City
( 23 ) The Relationship between Financial Development, Economic Growth, and Inflation: Evidence from Southeast Asia
( 24 ) The Mediating Effect of Financial Self-Efficacy on the Financial Literacy-Behavior Relationship: A Case of Generation Y Professionals
( 25 ) The Effect of Corporate Social Responsibility Disclosure on Corporate Financial Performance
( 26 ) Analyzing the Financial Soundness of Kuwaiti Banks Using CAMELS Framework
( 27 ) Analysing the Financial Strength of Nigeria: An Approach to Estimate the Index of Financial Safety
( 28 ) Determinants of Financial Performance and its Impact on the Growth of Islamic Bank Assets on Indonesia
( 29 ) Financial Inclusion and Poverty Alleviation: The Contribution of Commercial Banks in West Africa
( 30 ) Do Derivative Instruments Increase Firm Risk for Indonesia Non-Financial Companies?
( 32 ) Interest Rate Ceilings and Financial Exclusion in Kenya: Evidence from Commercial Banks’ Sectoral Credit Distribution
( 33 ) Drivers Behind the Financial Insolvency: An Empirical Study on the Textile Industry in Bangladesh
( 34 ) International Financial Reporting Standards Adoption and Earnings Management: The Fundamental Effect Framework
( 35 ) The Impact of Merger and Acquisition on the Financial Performance of the Nasdaq Listed Small Size Technology Companies
( 36 ) Financial Risks in Turkish Banking Industry: A Panel Data Analaysis on Istanbul Stock Exchange
( 37 ) The Euribor and EONIA Reform: Achieving Regulatory Compliance while Protecting Financial Stability
( 38 ) The Financial Decentralization Policy for Local Development in Cameroon: An Econometric Analysis
( 39 ) A Study on Financial Performance of Transport & Warehouses Firms Listed on the Hanoi Stock Exchange
( 40 ) Financial Development and Economic Growth in Nigeria: New Evidence from a Threshold Autoregressive and Asymmetric Analysis
( 41 ) Employee Motivation in Light Oncial, Non-Financial Rewards and Employee Commitment among Pharmaceutical SMEs of Indonesia
( 44 ) Contemporary Approach to Enhanced Road Transport System in Nigeria Through the Application of It-Based (Online) Bus Ticketing and Payment System
( 45 ) Strategic Evaluation of Distributed Power Generation Technology: A Sustainable Approach
( 46 ) Public Infrastructure Spending and Economic Growth in Nigeria: An Error Correction Mechanism (ECM) Approach
( 47 ) Study of the Relationship between Economic Growth and Inflation: Application to the Countries of the South Side of the Mediterranean: A Panel Data Approach
( 49 ) Structural Breaks and the Long-Run Stability of Demand for Real Broad Money Function in Nigeria: A Gregory-Hansen Approach
( 50 ) Determinants of Tax Revenue in Ethiopia (Johansen Co-Integration Approach)
( 51 ) Confirming the Mediation Effect of A Structural Model By Using Bootstrap Approach: A Case Study of Malaysian 8th Grade Students’ Mathematics Achievement
( 52 ) Determinants of Import Demand Functions of Pakistan: An ARDL Bound Testing Approach
( 53 ) A Factor Analysis Approach Towards a Study of the Factors Affecting Students’ Choice of Higher Education Institution: A Case Study of a Private Institution (Twintech International University College of Technology)
( 54 ) Analyzing Factors Affecting the Success of Social Media Posts for B2b Networks: A Fractional-Factorial Design Approach
( 55 ) Foreign Capital Inflows and Unemployment in Nigeria: A New Evidence from ARDL-Bounds Testing Approach
( 56 ) An Empirical Investigation into the Key Drivers of Economic Performance in the CEMAC Zone: A Panel Corrected Standard Errors Approach
( 58 ) Health Care Outcomes, Malnutrition and Food Security in Southern Africa Development Community: A Quantile Regression Approach
( 59 ) The Transitional Relationship between Economic Growth and Exchange Rate in Ghana: An Empirical Approach
( 60 ) Optimal Stock Portfolio Issuers of Building Construction Registered in LQ45 Based on the Markowitz Approach
( 61 ) Analysis of Effect of Profitability, Capital, Risk Financing, the Sharia Supervisory Board and Capabilities Zakat in Islamic Perspective with Circular Approach Causastion on Islamic Banks in Indonesia
( 62 ) Fiscal Reaction Functions and Public Debt Sustainability in Nigeria: An Error Correction Mechanism Approach
( 63 ) How can Female Executives Shape the Effectiveness of Executive Compensation?- A Multi-Dimensional Approach
( 64 ) Innovations Dissemination Approaches among Government Co-Operative Supporting Organisations in Tanzania
( 66 ) Analysis of Causal Nexus between Defense Spending and Economic Growth in Nigeria: A Toda-Yamamoto Approach
( 67 ) Towards a Proposal of a Local Authority Model Based on the Systemic Approach
( 68 ) Deficit Financing Asymmetry and Nigerias Economic Growth: A Nonlinear Autoregressive Distributed Lag Approach
( 69 ) Human Capital Development and Economic Growth in Nigeria: An Autoregressive Distributed Lag (ARDL) Approach
( 70 ) Assessment of Mental Health of Undergraduate Students Based on Age: A Bayesian Ordinal Quantile Regression Approach
( 71 ) Analysis of Synergies in Indian Corporate M&A Deals: A Logit Regression Approach
( 72 ) Study on Environment and Energy Using Belonging Materials
( 73 ) The Impact of Human Capital on Economic Growth: Evidence from Tunisia Using Star and Stecm Models
( 74 ) Influence Internship Learning Effect in Business Service Sector: Using Internship Self-Efficacy as the Mediator Variable
( 75 ) Estimating Value at Risk for Sukuk Market Using Generalized Auto Regressive Conditional Heteroskedasticity Models