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Risk spillover network in the supply chain system during the COVID-19 crisis: Evidence from China

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  • Li, Zhinan
  • Pei, Shan
  • Li, Ting
  • Wang, Yu

Abstract

The COVID-19 crisis seriously impacted the global economy and supply chain system. Unlike previous studies, this paper examines the risk spillover effects within the supply chain system rather than between financial and other specific industries. The hypotheses are proposed by developing and simulating an agent-based model; the copula-conditional value at risk model is employed to empirically validate these hypotheses in China during the COVID-19 crisis. The findings reveal that risks are transmitted and amplified from downstream, through midstream to upstream. Additionally, the financial industry amplifies the risk spillover from the midstream to the upstream and downstream. Moreover, the risk spillovers exhibit significant time-varying characteristics, and policy interventions can potentially mitigate the effect of such spillovers. This paper provides a theoretical basis and empirical evidence for risk spillover in supply chain systems and offers suggestions for industrial practitioners and regulators.

Suggested Citation

  • Li, Zhinan & Pei, Shan & Li, Ting & Wang, Yu, 2023. "Risk spillover network in the supply chain system during the COVID-19 crisis: Evidence from China," Economic Modelling, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:ecmode:v:126:y:2023:i:c:s0264999323002158
    DOI: 10.1016/j.econmod.2023.106403
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    2. Elena G. Popkova & Gulbakhyt Zh. Zholdasbekova & Anastasia A. Sozinova & Tatul Mkrtchyan & Bruno S. Sergi, 2024. "The Black Swan Theory Perspective and the Challenges of the COVID-19 Crisis as Catalysts for Managing a Business," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 25(1), pages 155-171, September.
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