A thousand words tell more than just numbers: Financial crises and historical headlines

Kim Ristolainen, Tomi Roukka and Henri Nyberg

Journal of Financial Stability, 2024, vol. 70, issue C

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. Feature contribution analysis and crisis case studies reveal that the new indicators capture more detailed, but still generalizable information on the buildup of crises.

Keywords: Financial crisis; Text data; Leading indicators; Topic model (search for similar items in EconPapers)
JEL-codes: C25 C82 G00 G01 N01 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:70:y:2024:i:c:s1572308923001092

DOI: 10.1016/j.jfs.2023.101209

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