The Impact of the Global Financial Crisis on Central Banking

The Impact ◽

Regulatory Reforms

This chapter describes the impacts of the global financial crisis on monetary policy and institutions. It argues that during the crisis, financial stability took precedence over traditional inflation targeting and discusses the emergence of unconventional policy instruments such as quantitative easing (QE), forex market interventions, negative interest rates, and forward guidance. It describes the interaction between the zero lower bound (ZLB) and QE, and proposals, such as raising the inflation target, to alleviate the ZLB constraint. The chapter discusses the consequences of the relative passivity of fiscal policies, “helicopter money,” and 100 percent reserve requirement. The crisis triggered regulatory reforms in which central banks’ objectives were expanded to encompass macroprudential regulation. The chapter evaluates recent regulatory reforms in the United States, the euro area, and the United Kingdom. It presents data on new net credit formation during the crisis and discusses implications for exit policies.

Assessing The Impact Of The Global Financial Crisis On GCC Countries

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v8i2.682 ◽

2010 ◽

Vol 8 (2) ◽

Cited By ~ 4

Author(s):

Hisham H. Abdelbaki

Keyword(s):

Financial Crisis ◽

Interest Rates ◽

Global Financial Crisis ◽

The United States ◽

Font Size ◽

Negative Effects ◽

Gcc Countries ◽

The World ◽

No doubt, the international financial crisis that started in the United States of America will cast its effects on all countries of the world, developed and developing. Yet these effects vary from one country to another for several reasons. The GCC countries would not escape these negative effects of this severe crisis. The negative effects of the crisis on gulf countries come from many aspects: first, decrease in price of oil on whose revenues the development programs in these countries depend; second, decrease in the value of US$ and the subsequent decrease in the assets owned by these countries in US$; third, a case of economic stagnation will prevail in the world with effects starting to appear. It is obvious that this would be reflected on the real sector in the economies causing a series of negative effects through decrease of the world demand for exports of GCC countries of oil, petrochemicals and aluminum.  Lastly, increased inflation rates with decreased interest rates will result in a decrease in real interest with an accompanying decrease in incentives for saving and consequently investment and economic development. The main aim of the research is to assess the economic effects of the global financial crisis on GCC countries. The paper results are that the big reserves of foreign currencies achieved by the GCC countries in the past few years have helped increase their ability to bear the effects of the financial effects on one hand and their ability to adopt expansionary policies through pumping liquidity to absorb the regressive effects of the crisis on the other. The paper recommends the necessity of taking precautionary procedures for the effects which will result from the expansionary policies effective in GCC countries.

Fiscal and Monetary Policies in Reaction to the Financial Tsunami by the Taiwanese Government

Review of Pacific Basin Financial Markets and Policies ◽

10.1142/s0219091511002172 ◽

2011 ◽

Vol 14 (01) ◽

pp. 153-169 ◽

Cited By ~ 4

Author(s):

Hsiao-Yin Chen ◽

Cheng-Few Lee ◽

Tzu Tai ◽

Kehluh Wang

Keyword(s):

Financial Crisis ◽

Financial Market ◽

Global Financial Crisis ◽

The United States ◽

Insurance Companies ◽

Monetary Policies ◽

Policy Measures ◽

The Impact ◽

Taiwanese Government

The main purpose of this paper is to investigate the impact of the 2007 financial tsunami on the Taiwanese financial market. We find that, although significant for banks, security firms, and insurance companies, the effect was relatively lower if compared with that in Europe and the United States. In addition, we present fiscal and monetary policies issued by the Taiwanese government in reaction to the global financial crisis. These policy measures focused on stabilizing the financial market, reducing the level of unemployment, and creating more lending opportunities in support of Taiwanese companies. We also discuss the policy measures of the US government and other Asian countries in relation to the global financial crisis. Finally, we provide some suggestions to improve financial supervision and enhance financial reforms in Taiwan.

The global financial crisis: Implications for capital to agribusiness

Applied Studies in Agribusiness and Commerce ◽

10.19041/apstract/2012/1-2/7 ◽

2012 ◽

Vol 6 (1-2) ◽

pp. 59-62

Author(s):

Bruce L. Ahrendsen

Keyword(s):

Financial Crisis ◽

Interest Rates ◽

Global Economy ◽

Global Financial Crisis ◽

Balance Sheet ◽

The United States ◽

The European Union ◽

Financial Obligations ◽

General Business ◽

The global economy has continued to experience lingering effects of the global financial crisis that began in 2007. Although attention was initially given to the liquidity crisis and survival of some the world’s largest corporations and institutions, the financial crisis is likely to have long-lasting implications for agribusiness. As the world slowly recovers from the crisis, another round of problems are emerging as governments and international institutions attempt to unwind the positions they took in an effort to prevent the global economic bubble from bursting. Perhaps the most problematic factor for businesses is access to capital in sufficient amounts and at affordable rates. Governments and institutions, particularly in the United States (U.S.) and the European Union, have increased their financial obligations as the result of activities taken to curtail the economic crisis. These financial obligations and the associated financial risks place pressure on financial markets and tend to restrain the availability of capital and increase the cost of capital for businesses. However, the U.S. agricultural credit market has not experienced problems to the same extent as general business (commercial and industrial) and real estate credit markets have. In general, U.S. farm businesses have a strong balance sheet, adequate repayment capacity, sufficient amount of assets to offer collateral for loans, and reasonable profits. Thus, U.S. farm businesses have had an ample supply of credit at relatively low interest rates.

A SAFE MONETARY CENTRAL BANKING POLICY AS A SIGNIFICANT INSTRUMENT FOR LIQUIDITY MAINTENANCE IN THE FINANCIAL SYSTEM

International Journal of New Economics and Social Sciences ◽

10.5604/01.3001.0012.9931 ◽

2018 ◽

Vol 8 (2) ◽

pp. 123-125

Author(s):

Dariusz Prokopowicz

Keyword(s):

Monetary Policy ◽

Financial Crisis ◽

Interest Rates ◽

Global Financial Crisis ◽

Financial System ◽

State Intervention ◽

Developed Countries ◽

Central Banking ◽

Financial Crisis Of 2008 ◽

Currently, it is assumed that the global financial crisis of 2008 was effectively mastered and averted several years ago, but its sources have not been fully eliminated. The anti-crisis model of state intervention that was applied during the global financial crisis of 2008 was a modified Keynsian formula known from the 1930s, adapted to the realities of contemporary national economies. The main instrument of anti-crisis policy was the significant development of a mild monetary policy and interventionist measures aimed at reducing the risk of bankruptcy of enterprises and banking entities and stopping the decline in lending in banking systems. In developed countries, anti-crisis interventionist assistance programs for the financial system and pro-active interventionist measures were activated in order to stimulate significantly weakened economic growth. As part of pro-development state intervention activities, the Federal Reserve Bank applied a low monetary policy of low interest rates and a program for activating lending and maintaining liquidity in the financial system by financing the purchase from commercial banks of the most endangered assets. A few years later, the European Central Bank applied the same activities of activation monetary policy.

Changes in monetary policy after the crisis - towards preventing banking sector instability

Corporate Ownership and Control ◽

10.22495/cocv11i3conf2p8 ◽

2014 ◽

Vol 11 (3) ◽

pp. 470-476

Author(s):

Aleksandra Szunke

Keyword(s):

Financial Crisis ◽

Financial Stability ◽

Global Economy ◽

Banking Sector ◽

Global Financial Crisis ◽

Scientific Research ◽

The United States ◽

Mortgage Market ◽

Traditional System ◽

The instability of the banking sector has become the subject of wider scientific research during the global financial crisis. The financial crisis of the first decade of the twenty-first century began in the U.S. subprime mortgage market and quickly spread to the whole banking sector in the United States as well as in many countries of the global economy. Among five major American investment banks - Lehman Brothers went bankrupt, Bear Stearns and Merrill Lynch were taken over by other banks, and Goldman Sachs and Morgan Stanley were transformed into commercial banks, which were covered by the supervision and regulations of the central bank - the Federal Reserve System. The consequences of the global financial crisis also affected British banks, including The Royal Bank of Scotland, Lloyds Bank, Halifax, Abbey Bank, Barclays Bank and NBC Bank. In Iceland, during the global financial crisis which affected the Icelandic banking sector, three largest banks: Glitnir Bank, Landsbanki and Kauphting were nationalized, which means that the control was taken over by their government. It has caused, that reflections and scientific research on financial stability were replaced by the study of instability in particular in relation to the banking sector. The main aim of the study is to identify the general framework of the response system of central banks on the phenomenon of banking sector instability, in the context of preventing it in a long term. Current - the traditional system proved to be ineffective, because it did not prevent the spread of the factors that led to the destabilization of the banking market

New Zealand Reserve Bank Reform

Policy Quarterly ◽

10.26686/pq.v15i2.5373 ◽

2019 ◽

Vol 15 (2) ◽

Author(s):

Ben Thirkell-White

Keyword(s):

Decision Making ◽

New Zealand ◽

Financial Crisis ◽

Inflation Targeting ◽

Global Financial Crisis ◽

Central Banking ◽

Reserve Bank ◽

Bank Reform ◽

Committee Decision Making ◽

The inflation-targeting approach to central banking was invented in New Zealand, before becoming the global standard during the 1990s. Despite this popularity, significant reforms were introduced to the Reserve Bank Act in late 2018 as part of a two-stage review, notably an expanded mandate and a committee decision-making structure. This article reviews the changes in the light of global and domestic challenges to central banking emerging since the global financial crisis.

Analysis of Interest Rate Impact on the Profitability Level of the Banking System in Albania during the Period 2005 -2014

European Journal of Economics and Business Studies ◽

10.26417/ejes.v3i1.p203-213 ◽

2015 ◽

Vol 3 (1) ◽

pp. 203

Author(s):

Sokol Ndoka ◽

Anilda Bozdo

Keyword(s):

Interest Rate ◽

Financial Crisis ◽

Interest Rates ◽

Global Financial Crisis ◽

Banking System ◽

The Other ◽

Factors Affecting ◽

The Interest Rate ◽

This study is an analysis of the movement and impact of interest rates on the profitability level of the banking system in Albania. This analysis covers a 10-year timeframe (is organized in three time segments - before, during and after the financial crisis), taking into consideration the critical point of the years 2008-2009 considered as the “peak” of the global financial crisis. Such separation is made in order to see the possible changes of each period of time and to identify the impact differences of this factor in each period of study. This study is based on the hypothesis that the decrease of the interest rate has positively affected the income increase from interest as a result of the impact of two factors, negative levels of Gaps and an increased level of spread toward the average assets. As a matter of fact, it has neutralized on a certain level the other risks such as that of the loan which has dominated over the other risks. This paper is based on an empirical study with secondary quantitative and qualitative data. This study provides a considerable contribution in the framework of identification of factors affecting the profitability of the banking system in Albania, namely in the context of interest rate; In addition, this study aims at highlighting the importance of open Gaps minimization for the efficient profitability increase of the financial system.

Financial Turbulence and Crisis

10.1093/acrefore/9780190228637.013.1506 ◽

2021 ◽

Author(s):

Caner Bakir ◽

Sinan Akgunay ◽

Mehmet Kerem Coban

Keyword(s):

Financial Crisis ◽

Financial Crises ◽

Global Financial Crisis ◽

The United States ◽

Socioeconomic Outcomes ◽

Explanatory Factors ◽

The United Kingdom ◽

Political Outcomes ◽

Why do financial turbulence and crises occur? What are different types of financial crises? Why do different countries experience financial crises, while some are more resilient? These are intriguing questions that relate to financial turbulence and crisis. The financial system is inherently susceptible to turbulence and crises: The world has witnessed several rounds of financial turbulence since the early 2000s. The 2008 global financial crisis and the worldwide financial turbulence that took place following the impact of the COVID-19 pandemic are examples. Periods of financial turbulence relate to heightened uncertainty and volatility in financial markets, and some of those periods can trigger financial crises. It is puzzling that although some countries can weather financial turbulence without falling into a financial crisis, others do not. This was observed during the global financial crisis. For example, financial turbulence triggered a financial crisis in some of the liberal market economies such as the United States and the United Kingdom. In contrast, Australia and Canada remained relatively resistant to financial turbulence. The existing literature tends to justify how and why a period of financial turbulence resulted in a financial crisis by looking at individual structural-, institutional-, or actor-level factors. In addition to the independent (separate) effects of these three principal explanatory factors, there is a need for detecting and analyzing their individual; interactive; and/or cumulative structural, institutional, and agential explanatory factors at work. Thus, it is crucial to explore some of the interrelated dynamics informing agency behavior which generate socioeconomic outcomes. Specifically, we call for a rigorous and refined analysis of how and why complementarities and enabling conditions that stem from interactions between structural and institutional factors influence actors’ agency and socioeconomic/political outcomes.

Eddison Walters Modern Economic Analysis Theory: Building on the Eddison Walters Risk Expectation Theory of The Global Financial Crisis of 2007 and 2008

Archives of Business Research ◽

10.14738/abr.86.8399 ◽

2020 ◽

Vol 8 (6) ◽

pp. 118-126

Author(s):

Eddison T. Walters

Keyword(s):

Data Analysis ◽

Financial Crisis ◽

Real Estate ◽

Economic Analysis ◽

Global Financial Crisis ◽

The United States ◽

Analysis Theory ◽

Modern Economic ◽

The results of several recent studies called the analysis of economic data from the United States real estate industry preceding the Global Financial Crisis of 2007 and 2008 into question. Advancement of technology is a disruptive force throughout the economy today. The speed at which technology continues to evolve has resulted in significant changes throughout the entire economy around the world. As technology continue to evolve, there is no question technology disruption will continue to occur. Economist can no longer rely solely on backward looking historical data when conducting economic analysis. The evolution of the global economy require an understanding of the impact of advancement in technology occurring throughout the economy as researcher conduct analysis of data to draw conclusions. The result of recent studies led to the development of “Eddison Walters Modern Economic Analysis Theory”. Data analysis suggesting the false conclusion of the existence of a real estate bubble in the United States real estate market preceding the Global Financial Crisis of 2007 and 2008 was presented in Walters and Djokic (2019). Nonlinear regression analysis for correlation of variables in Walters (2019) resulted in 194.041 Mean Dependent Variable, 0.989 Adjusted R-square, 5.908 Square Error of Regression, and 488.726 Sum-of-Square Residual for the independent variable of “advancement in technology”, and the dependent variable of “home purchase price” preceding the Global Financial Crisis of 2007 and 2008. Walters (2019) concluded advancement in technology was the most significant factor causing home prices to increase preceding the Global Financial Crisis of 2007 and 2008. Overwhelming evidence led the researcher to conclude, the failure to consider the impact of advancement in technology in data analysis was the most significant error responsible for causing data analysis distortion leading to the false conclusion of the existence of a real estate bubble preceding the Global Financial Crisis of 2007 and 2008 (Walters, 2020). The researcher proposed “Eddison Walters Modern Economic Analysis Theory” in the current study. The goal of the new theory is to prevent potential error in data analysis resulting in data distortion due to the failure to consider the impact of advancement in technology on the data when conducting economic research in the future.

Zadłużenie gospodarstw domowych a dynamika wydatków konsumpcyjnych w krajach OECD po wybuchu kryzysu finansowego

Kwartalnik Kolegium Ekonomiczno-Społecznego Studia i Prace ◽

10.33119/kkessip.2017.1.9 ◽

2017 ◽

pp. 145-158

Author(s):

Piotr Bolibok

Keyword(s):

Economic Growth ◽

Financial Crisis ◽

Interest Rates ◽

Global Financial Crisis ◽

Disposable Income ◽

Household Debt ◽

Rate Of Growth ◽

The paper aims at empirical evaluation of the impact of household debt on the dynamics of consumption spending since the beginning of the global financial crisis. The research employed linear regression analysis of the rate of growth of household spending against the rate of growth of disposable income, the level of indebtedness and long-term interest rates in the OECD member states between 2008-2014. The results obtained indicate that household indebtedness was one of the factors influencing the dynamics of consumption demand and thus the processes of economic growth in the OECD states after the beginning of the global financial crisis. Variations in the relation of total debt to net disposable income and in the level of long-term interest rates were both negatively related to the changes in consumption spending. This impact turned out to be markedly stronger when total household debt of a given country was exceeding 85% of GDP, which is consistent with the results of previous investigations on the in&uence of the indebtedness of household sector on the dynamics of economic growth