Economics/Glossary

S

• Securitisation [r]: The conversion of a cash flow into a marketable security (usually a claim upon debt repayments) and often categorised according to the expected risk of default (examples include collateralised debt obligations and structured investment vehicles.) ^[e]
• Selling short [r]: Selling borrowed stock in the expectation that its price will fall, and with the intention of subsequently buying it back and returning it. ^[e]
• Shadow banking system [r]: a collective term often used to denote institutions other than banks that lend money. ^[e]
• Sharpe ratio [r]: Measure of the rate of return per unit of variability of an investment portfolio, obtained by subtracting the current risk-free interest rate from the portfolio's current rate of return and dividing the result by the standard deviation of its rate of return. ^[e]
• Skewness [r]: a measure of the "lobsideness" of a probability distribution. Positive skewness indicates that the tail of the distribution is more stretched on the side above the mean - indicating that there are more positive than negative deviations from the mean. ^[e]
• Sovereign default [r]: The failure of a government to comply with its interest payment or debt repayment obligations. ^[e]
• Sovereign spread [r]: the difference between the yield on a country's bond issue and the yield on a comparable bond issued by a benchmark country such as the United States or Germany. ^[e]
•  Spread - see Yield spread
• Standard deviation [r]: A statistical measure for the fluctuation of a random variable about its mean value (the square root of the variance). ^[e]
• Standardised budget deficit [r]: the cyclically adjusted budget deficit, after further adjustments to exclude transitory influences. ^[e]
• Structured investment vehicle [r]: (SIV) a fund that borrows money - usually at LIBOR rates - by the issue of asset backed commercial paper and uses it to finance longer term loans at higher interest rates. ^[e]
• Supply-side measures [r]: measures taken with the purpose of increasing a country's economic efficiency, e.g. by removing barriers to competition or counter market failures. ^[e]
• Swap contract [r]: An agreement to exchange financial obligations between two organisations with complementary needs, for example an agreement to swap fixed interest obligations for variable interest obligations. ^[e]
• Systemic failure (finance) [r]: The inability of a large proportion of a country's financial institutions to perform their financial intermediary function. ^[e]