A Thousand Words Tell More Than Just Numbers: Financial Crises and Historical Headlines

46 Pages Posted: 14 Nov 2021

See all articles by Kim Ristolainen

Kim Ristolainen

University of Turku

Tomi Roukka

University of Turku

Henri Nyberg

University of Turku

Date Written: November 11, 2021

Abstract

We show that financial crises are preceded by changes in specific types of narrative information contained in newspaper article titles. Our novel international dataset and the resulting empirical evidence are gathered by integrating information from a large panel of economic news articles in global newspapers between the years 1870 and 2016 with conventional macroeconomic and financial indicators. We find that the predictive information of newspaper article titles that signals coming crisis episodes is substantial over and above the macroeconomic and financial indicators. The new indicators capture common features that have often been discussed as potential causes of specific crises but which have not been incorporated into empirical models.

Keywords: financial crisis, text data, leading indicators, topic model

JEL Classification: G00, G01, N01, C25, C82

Suggested Citation

Ristolainen, Kim and Roukka, Tomi and Nyberg, Henri, A Thousand Words Tell More Than Just Numbers: Financial Crises and Historical Headlines (November 11, 2021). Available at SSRN: https://ssrn.com/abstract=3961534 or http://dx.doi.org/10.2139/ssrn.3961534

Kim Ristolainen (Contact Author)

University of Turku ( email )

Tomi Roukka

University of Turku ( email )

Turku, 20014
Finland

Henri Nyberg

University of Turku ( email )

Turku, 20014
Finland

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