Swiss Finance Institute

Abstract. Floods are a major source of losses from natural hazards, yet modelling their occurrence and severity is challenging due to complex spatial dependencies and non-stationary behaviour over time, both of which are increasingly affected by climate change. In this study, we characterise spatial and temporal non-stationarity in flood risk and quantify the dependence of flood occurrences under minimal modelling assumptions. We analyse a unique dataset of flood records from 27 Alpine lakes spanning 1,450 years, applying penalised additive mixed models to capture the empirical spatio-temporal dependence structure of flood events. Our results reveal pronounced regional and temporal variations in flood risk and highlight periods of elevated susceptibility. The model further allows extrapolation of flood occurrence probabilities to unobserved locations across the European Alps, providing a robust tool for hazard assessment under changing climatic conditions.

We present new local magnitude models for Switzerland, derived using a top-quality input dataset of ground-motion intensity measures, obtained through an automated and consistent waveform processing workflow (https://doi.org/10.1785/0120250032). The input dataset includes Wood-Anderson displacement response amplitudes calculated from 150,000 waveforms generated by about 15,000 earthquakes in the region of interest. This dataset is substantially larger than those used in previous magnitude studies in Switzerland and contains a large number of recordings at short distances for smaller events (about 5,000 earthquakes with magnitudes lower than 1, and about 1500 records at hypocentral distances shorter than 5 km), which were sparse in earlier studies. The parametrization of the local magnitude model is based on a detailed investigation of attenuation characteristics of the Wood-Anderson response amplitudes, comprising: (i) linear and logarithmic distance terms to represent different physical mechanisms of seismic wave propagation; (ii) hinge distances to allow modelling the effects of Moho reflections and the associated changes in attenuation rate; (iii) regional adjustments (Swiss Alps vs Swiss northern Foreland) based on the length and location of the surface projection of the source-to-site ray paths. Model coefficients are determined through mixed-effects regressions, thus allowing the derivation of station-magnitude correction terms consistent with the reference rock-like ground type used for mapping seismic hazard in Switzerland. We assess and validate the model’s performance via uncertainty analyses, validation against recent data not used in model calibration, validation against recordings of major Swiss events, and comparisons with results obtained from alternative, fully independent modelling approaches (including non-parametric and 2D cell-based methods). The new model yields systematically lower magnitudes, with an average difference of 0.1-0.2 magnitude units for smaller events with magnitudes below 2.5 and for earthquakes located in the Swiss northern Foreland, compared to the currently authoritative catalogue magnitudes. Based on the new candidate magnitude model, we present and discuss an updated empirical scaling relationship between local and moment magnitudes.

In contrast to convergent plate tectonics during subduction, collisional orogens in their late stages (e.g., Alps, Pyrenees, Himalayas) typically exhibit little to no magmatic activity. Consequently, these settings have historically received limited attention in exploration for geothermal energy. Nevertheless, such orogens do host active, amagmatic geothermal systems owing to the co-occurrence of several key features: (1) ongoing crustal-scale deformation within the brittle upper crust, which generates spatially dispersed, permeable fracture networks; (2) major, steep strike-slip and normal faults with permeable dilation zones that cut across the fracture networks; (3) geothermal gradients of 20–35 °C/km, which provide heat to circulating fluids; (4) pronounced topographic relief, which induces strong hydraulic head gradients between high surface elevations and valley floors.The interaction of these features produces dynamic geothermal circulation systems: meteoric water infiltrates at high elevations into the dispersed fracture networks and is focused into the major faults, allowing the water to descend to depths up to 10 km and become heated to above 200 °C. Subvertical dilation zones within the major faults link the deep flow paths to the surface or relatively shallow depths, generally at lower elevations, allowing the topographically induced hydraulic gradients to drive the hot water up to discharge sites in the valley floors.Unfortunately, in orogens where valleys are glacially over-deepened, outflow is commonly hidden under thick sequences of unconsolidated sediments. Therefore, the challenge in exploration in such settings is to locate these blind geothermal systems. To address this challenge, we examined the geothermal favorability of the mountainous Valais region in SW Switzerland, which is one of the most well-known areas of geothermal activity in the European Alps. Through collaboration among structural geologists, hydrogeochemists and seismologists, all available geological and hydrochemical data were compiled in a GIS database to conduct a Play Fairway Analysis. Each data layer was evaluated and rated for its ability to directly or indirectly indicate sites of deep thermal upflow. By weighting and combining these layers, we produced favorability maps displaying areas where active upflow of thermal water is most likely. A notable outcome is that most of the known thermal springs in the study area fall within the identified favorable areas. This success demonstrates the usefulness of the favorability maps in guiding more spatially-targeted exploration in the Valais region. Moreover, our methodology provides a transferable framework for exploration in similar geodynamic settings elsewhere.

This study aims to identify and prioritize the key factors influencing export performance among Turkish exporters, based on the resource-based view (RBV) and industrial organization theory (IO), categorizing the factors as internal and external, and employing the Stepwise Weight Assessment Ratio Analysis (SWARA). Twenty-five factors across Internal (IF) and External (EF) categories were evaluated through expert assessments. Results reveal that Internal Factors (58.0%) significantly dominate External Factors (42.0%), indicating that Turkish exporters possess substantial control over their export competitiveness. The top five critical factors are Management and Leadership (9.6%), Strategy (6.2%), Technological Change (5.3%), Industry and Sector Activity (5.0%), and Competitors (5.0%). Surprisingly, traditional factors such as firm size, international experience, and digitalization ranked much lower, challenging conventional assumptions about export success. A leave-one-out (LOO) sensitivity analysis further validated the robustness of these rankings, with Management and Leadership, and Strategy emerging as the most stable and dominant factors across all scenarios. The predominance of management and strategic factors over structural characteristics suggests that even smaller, less experienced companies can achieve export success through effective leadership and strategic planning. These findings contribute theoretically by supporting the notion that the resource-based view has a greater impact on export performance than the industrial organization theory, and they provide practical guidance for companies to focus on managerial and leadership skills, organizational capabilities, and strategic approaches to enhance export investments. The study presents the first comprehensive SWARA-based ranking of export performance factors in the Turkish context, providing empirical evidence to support the internal-external factor debate in the international business literature.

Abstract Closing auctions account for about 10% of daily trading volume and offer a potentially attractive alternative to trading in the continuous market. We find that the price impact is lower in closing auctions than in the continuous market for all stocks except Nasdaq microcaps. Opening auctions are illiquid. We compute trading costs for anomalies based strategies by strategically placing orders in the lower cost mechanism. The annualized trading costs for long/short portfolios based on financial ratios such as profitability and investment range from 17 to 41 basis points (bps). Excluding microcaps, these costs fall to 9–21 bps in closing auctions.

We study how trade liberalization affects financial and innovation decisions of large firms across major G7 countries. We document how firms increase their cash holdings when their country’s trading partners lower their import tariffs, while we find no effect of a decrease in the country’s own import tariffs. Specifically, we find that the increase in cash holdings occurs before tariff cuts by trading partners and is associated with higher R&D spending and patent filing after the cuts. Our results are consistent with the predictions of a model in which higher expected returns to innovation from enhanced export market access lead to higher cash buffers.