Cross-Sectoral Regulatory Influences on Systemic Risk: Lessons from Brazil

24 Pages Posted: 23 May 2024

See all articles by Elias Cavalcante Filho

Elias Cavalcante Filho

University of São Paulo (USP)

Rodrigo De-Losso

University of São Paulo (USP) - Department of Economics

Felipe Sande

University of São Paulo (USP)

José Savoia

FEA-USP

Abstract

This paper explores the multifaceted impact of regulatory changes on systemic risk in the affected sector and their contagion effect on other regulated industries. Focusing on the effects of an unexpected legislation change aimed at reducing electricity costs in Brazil, we analyze its implications for the electricity sector and beyond. Using Synthetic-Control and Diff-in-Diff methodologies, we find that event not only increased systemic risk within the electricity sector but also influenced others regulated sectors, highlighting the interconnectedness of regulatory environments. Our findings underscore the importance of understanding public policy impacts on regulated sectors, highlighting risk perception and regulatory frameworks.

Keywords: Regulatory impact, policy evaluation, contagion effect, Synthetic Control, Difference-in-differences, Cross-sectoral impact

Suggested Citation

Cavalcante Filho, Elias and De-Losso, Rodrigo and Sande, Felipe and Ferreira Savoia, Jose Roberto, Cross-Sectoral Regulatory Influences on Systemic Risk: Lessons from Brazil. Available at SSRN: https://ssrn.com/abstract=4839641 or http://dx.doi.org/10.2139/ssrn.4839641

Elias Cavalcante Filho (Contact Author)

University of São Paulo (USP) ( email )

Rua Luciano Gualberto, 315
São Paulo, São Paulo 14800-901
Brazil

Rodrigo De-Losso

University of São Paulo (USP) - Department of Economics ( email )

Av. Prof. Luciano Gualberto 908
Sao Paulo SP, 05508-010
Brazil
551130930957 (Phone)

Felipe Sande

University of São Paulo (USP) ( email )

Jose Roberto Ferreira Savoia

FEA-USP ( email )

Av. Prof. Luciano Gualberto 908
São Paulo SP, São Paulo 05508-900
Brazil

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