A NOTE ON LEVERAGE AND THE MACROECONOMY

2014 ◽  
Vol 20 (1) ◽  
pp. 429-445 ◽  
Author(s):  
Khandokar Istiak ◽  
Apostolos Serletis
Keyword(s):  
Financial Services ◽  
Economic Activity ◽  
Global Financial Crisis ◽  
The United States ◽  
Important Distinction ◽  
Shadow Banks ◽  
The Past ◽  
Macroprudential Policies ◽  
The Global Financial Crisis ◽  
The Relationship

In this paper we investigate the relationship between leverage and the level of economic activity in the United States, using quarterly data over the period 1951–2012. We address the question for five different measures of leverage—household leverage, nonfinancial firm leverage, commercial bank leverage, broker–dealer leverage, and shadow bank leverage—making a distinction between traditional banks and shadow banks, the latter being a consequence of financial innovation and deregulation in the financial services industry over the past 30 years. We investigate whether the relationship between leverage and the level of economic activity is nonlinear and asymmetric using slope-based tests as well as tests of the null hypothesis of symmetric impulse responses. Our results inform policymakers about the important distinction between traditional banks and the market-based financial intermediaries that have been at the center of the global financial crisis of 2007–2009. They also inform about the macroeconomic effects of the deleveraging process that began in 2008, as well as about the need for countercyclical macroprudential policies to reduce the procyclicality of the financial system.

Financialization

2018 ◽  
pp. 276-290
Author(s):  
Ravi Roy ◽  
Thomas D. Willett
Keyword(s):  
Financial Markets ◽  
Financial Services ◽  
Capital Mobility ◽  
Global Financial Crisis ◽  
Economic Globalization ◽  
The Past ◽  
The World ◽  
The Global Financial Crisis ◽  
National Economies ◽  
Global Financial System

The size and scope of financial sectors throughout the world have grown exponentially in tandem with the rise of globalization and increased capital mobility. The terms “economic globalization” and “financialization” are often discussed as inextricably related phenomena. Although the rapid increase in the number and variety of financial services and products during the past four decades has helped spur economic growth and create wealth on an unprecedented scale, the devastating fallout from the global financial crisis of 2008–2009, and the economic turbulence that followed, demonstrates how poorly managed financial sectors can simultaneously cause enormous pain. This chapter argues that if the opportunities created by economic globalization and financialization are to be maximized, while at the same tempering volatile financial markets, then the global financial system (and the national economies connected with it) must be fundamentally restructured. A number of ways that should be taken under consideration are discussed.

scholarly journals Corporate governance and performance of listed commercial banks in South Africa

2014 ◽  
Vol 11 (2) ◽  
pp. 677-687
Author(s):  
Sam Ngwenya
Keyword(s):  
South Africa ◽  
Corporate Governance ◽  
Commercial Banks ◽  
Global Financial Crisis ◽  
The United States ◽  
Executive Directors ◽  
Governance Indicators ◽  
And Performance ◽  
The Global Financial Crisis ◽  
The Relationship

The global financial crisis of 2008 that resulted in the collapse of many financial institutions in the United States (US) and Europe have resulted in debates over the failures of corporate governance structures to properly protect investors. The main objective of the study was to determine the relationship between corporate governance and performance of listed commercial banks in South Africa. The results of the study indicated a statistically positive significant relationship between board size, proportion of non-independent and non-executive directors and bank performance. The results of the rest of the corporate governance indicators are mixed when using different performance measurement variables.

scholarly journals ‘Rise of the rest’: As hype and reality

2019 ◽  
Vol 33 (2) ◽  
pp. 213-228 ◽  
Author(s):  
Ayşe Zarakol
Keyword(s):  
Global Financial Crisis ◽  
International System ◽  
The United States ◽  
Rising Powers ◽  
The West ◽  
Financial Decisions ◽  
The Past ◽  
Financial Bubble ◽  
The Global Financial Crisis ◽  
Structural Shifts

The past decade has been characterised (among other things) by the emergence of a discourse about the ‘Rise of the Rest’. (Some) non-Western states have been described as ‘rising powers’ capable of agency in the international system and as potential partners for the West in global governance. This stands in contrast to a more traditional narrative that saw the non-West primarily as a source of international problems and a developmental project. Does this discursive shift signify a historic reversal in how the non-West understood by the West? The answer is complicated. In this article, I argue that the hype about ‘rising powers’ in Western policy circles following the Global Financial Crisis of 2007–2008 had little relation to an ‘objective’ analysis of actual structural shifts in favour of ‘the Rest’ and was more akin to a financial bubble, with speculation driving perceptions of ‘rising powers’. I also show that the ‘rising powers’ literature is better located within the broader (and long-standing) debate about the decline of the United States, and should be read more as a manifestation of American anxieties and hopes than as informing us about the choices or the motivations of the ‘rising powers’. Ironically, however, the Western hype nevertheless has helped along a structural shift that is under way, first by partly moulding reality in that direction (especially in the form of financial decisions), but more importantly by freeing non-Western powers (for better or worse) from their internalised cages of perceived inferiority and lack of agency in the modern international order.

Volatility spillover between the US, Chinese and Australian stock markets

2017 ◽  
Vol 43 (2) ◽  
pp. 263-285 ◽  
Author(s):  
Emawtee Bissoondoyal-Bheenick ◽  
Robert Brooks ◽  
Wei Chi ◽  
Hung Xuan Do
Keyword(s):  
United States ◽  
Financial Services ◽  
Stock Markets ◽  
Global Financial Crisis ◽  
The United States ◽  
Jel Classification ◽  
Volatility Spillover ◽  
Stock Market Volatility ◽  
Index Level ◽  
The Global Financial Crisis

We assess the stock market volatility spillover between three closely related countries, the United States, China and Australia. This study considers industry data and hence provides a clear idea of the channels through which volatility is transmitted across these countries. We find that there is significant bilateral causality between the countries at the market index level and across most of the industries for the full sample period from July 2007 to May 2016. There is one-way volatility spillover from the United States to China in the financial services, industrials, consumer discretionary and utilities industry. There is insignificant volatility spillover from the Australian to Chinese stock markets in financial services, telecommunications and energy industries. Once we remove the effect of the global financial crisis (GFC), we find significant bilateral relationship across all of the industries across the three countries. JEL Classification: G15

scholarly journals WTO Reform: A China Round?

2020 ◽  
Vol 114 ◽  
pp. 23-32
Author(s):  
Henry Gao
Keyword(s):  
United States ◽  
World Trade ◽  
Global Financial Crisis ◽  
Rapid Development ◽  
The United States ◽  
Chinese Economy ◽  
Economic Decline ◽  
The Past ◽  
The World ◽  
The Global Financial Crisis

Since its accession to the World Trade Organization (WTO), China's exports have been growing exponentially. In 2009, China became the world's top goods exporter. Four years later, China unseated the United States as the top trading nation in the world. In contrast to the burgeoning Chinese economy, the United States and Europe have been suffering from economic decline since the global financial crisis in 2008. China regards its rise as a long overdue restoration of its rightful position, as it has been the largest economy in the world for most of its history, except the brief aberration over the past 150 years. The Western powers, however, view China's rapid development with suspicion, as they attribute China's success mostly to its state-led development model, with state-owned enterprises, massive subsidies, and heavy government intervention playing a major role.

scholarly journals Executives’ remuneration and company performance: An evaluation

2011 ◽  
Vol 7 (2) ◽  
pp. 16-31 ◽  
Author(s):  
Mohammad Istiaq Azim ◽  
Joyce Chua Ai Mei ◽  
Samina Rahman
Keyword(s):  
Financial Crisis ◽  
Performance Measures ◽  
Global Financial Crisis ◽  
Pay For Performance ◽  
Stock Exchange ◽  
The United States ◽  
Company Performance ◽  
Executive Pay ◽  
The Global Financial Crisis ◽  
The Relationship

Executive pay became a much discussed issue during the recent global financial crisis. Substantial research has been done in the United States and United Kingdom, while research in Australia is still limited, especially in terms of using the data for the financial crisis. This paper will investigate the relationship between Australian executives’ remuneration and their companies’ performance during the global financial crisis. Two approaches were used to examine the relationship: firstly, an investigation of the pay-for performance relationship that existed during the global financial crisis; and secondly, checking the robustness test by using one year before-and-after data. The sample is taken from the Top 200 companies from the Australian Stock Exchange (ASX) list for 2007 and 2008. In order to achieve a better understanding of this relationship, a conceptual model has been developed. Results show that Australia’s business reward system is quite effective because executives’ remuneration were reduced by their respective companies when they underperformed during this particular crisis. Overall, this study concludes that there is a positive and significant relationship between executives’ remuneration and company performance during the global financial crisis, with higher sensitivity to market-based performance measures than accounting-based performance measures.

scholarly journals The Global Trade Slowdown: Cyclical or Structural?

2018 ◽  
Vol 34 (1) ◽  
pp. 121-142 ◽  
Author(s):  
Cristina Constantinescu ◽  
Aaditya Mattoo ◽  
Michele Ruta
Keyword(s):  
Structural Change ◽  
Global Financial Crisis ◽  
Global Trade ◽  
Correction Model ◽  
The Past ◽  
Key Driver ◽  
Trade Elasticity ◽  
The Global Financial Crisis ◽  
The Relationship

Abstract This paper focuses on the sluggish growth of world trade relative to income growth in recent years. We use a simple empirical strategy based on an error correction model to assess whether the global trade slowdown is structural or cyclical. An estimate of the relationship between trade and income in the past four decades reveals that the long-term trade elasticity rose sharply in the 1990s, but declined significantly in the 2000s, even before the global financial crisis. These results suggest that trade is growing slowly not only because of slow GDP growth, but also because of a structural change in the trade-GDP relationship in recent years. The available evidence suggests that a key driver of structural change over the 2000s is the slowing pace of international vertical specialization, which accounts for between one-quarter and one-half of the decline in import growth from the 1990s to the 2000s.

On the formation of a New Paradigm of fiscal Policy

2013 ◽  
pp. 152-158 ◽  
Author(s):  
V. Senchagov
Keyword(s):  
Public Finance ◽  
Fiscal Policy ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Domestic Demand ◽  
Real Economy ◽  
New Paradigm ◽  
Monetary Aggregate ◽  
The Past ◽  
The Global Financial Crisis

Due to Russia’s exit from the global financial crisis, the fiscal policy of withdrawing windfall spending has exhausted its potential. It is important to refocus public finance to the real economy and the expansion of domestic demand. For this goal there is sufficient, but not realized financial potential. The increase in fiscal spending in these areas is unlikely to lead to higher inflation, given its actual trend in the past decade relative to M2 monetary aggregate, but will directly affect the investment component of many underdeveloped sectors, as well as the volume of domestic production and consumer demand.

The Pandemic Exposes an Ailing US Governance Model

2020 ◽  
Vol 119 (820) ◽  
pp. 310-316
Author(s):  
Alasdair Roberts
Keyword(s):  
Financial Crisis ◽  
Developing World ◽  
Global Financial Crisis ◽  
Political Polarization ◽  
Washington Consensus ◽  
The Past ◽  
Governance Model ◽  
Governance Challenges ◽  
The Global Financial Crisis ◽  
Current Governance

Since the 1990s and Bill Clinton’s embrace of key parts of Ronald Reagan’s legacy, mainstream US governance has been guided by a bipartisan consensus around a formula of shrinking the federal government’s responsibilities and deregulating the economy. Hailed as the ultimate solution to the age-old problem of governing well, the formula was exported to the developing world as the Washington Consensus. Yet growing political polarization weakened the consensus, and in a series of three major crises over the past two decades—9/11, the global financial crisis, and the COVID-19 pandemic—US policymakers opted for pragmatism rather than adherence to the old formula, which appears increasingly inadequate to cope with current governance challenges.

Ocena antykryzysowej polityki gospodarczej Stanów Zjednoczonych i wybranych państw członkowskich Unii Europejskiej w latach 2005–2014

2016 ◽  
pp. 26-46
Author(s):  
Marcin Jan Flotyński
Keyword(s):  
United States ◽  
European Union ◽  
Financial Markets ◽  
Global Economy ◽  
Global Financial Crisis ◽  
The United States ◽  
The European Union ◽  
High Volatility ◽  
The Global Financial Crisis ◽  
Domestic Products

The global financial crisis in 2007–2009 began a period of high volatility on the financial markets. Specifically, it caused an increased amplitude of fluctuations of the level of gross domestic products, the level of investment and consumption and exchange rates in particular countries. To address the adverse market circumstances, governments and central banks took actions in order to bolster the weakening global economy. The aim of this article is to present the anti-crisis actions in the United States and selected member states of the European Union, including Poland, and an assessment of their efficiency. The analysis conducted indicates that generally the actions taken in the United States in response to the crisis were faster and more adequate to the existing circumstances than in the European Union.

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