Title: Contagion effects in small business failures: A spatial multilevel autoregressive model
Authors: Raffaella Calabrese - University of Edinburgh (United Kingdom) [presenting]
Robert Stine - Wharton University of Pennsylvania (United States)
Abstract: The impact of nearby UK cities characteristics on small business defaults is studied. Credit scoring models would usually rely on city-level fixed effects to capture the economic conditions of the cities where SMEs are located. However, this method ignores the contagion effects given by network ties between neighboring cities. To include both contagion effects between and within cities, we propose a Bayesian multilevel model for binary data. We apply this model to data on SMEs located in the five biggest cities in the UK.