Financial System Stability and Market Confidence

2010 ◽  
Vol 9 (1) ◽  
pp. 25-47 ◽  
Author(s):  
Kiyohiko G. Nishimura
Keyword(s):  
Financial Crisis ◽  
Financial Markets ◽  
Financial System ◽  
The United States ◽  
Mortgage Market ◽  
System Stability ◽  
Key Factors ◽  
Safety Nets ◽  
Catastrophe Insurance ◽  
Contingent Capital

This paper first explains why the financial crisis of 2007–08 started in the United States, in particular, in the sub-prime mortgage market, a periphery of their financial markets. Agency problems in complex securitization and investors' “responsibility avoidance” behavior are argued to be key factors in the sub-prime mortgage meltdown. It then examines the collapse of global financial markets and the erosion of market confidence that followed, and measures taken by governments and central banks to save the financial system. Finally, the paper explores possible safety nets that may prevent another financial crisis: private-sector capital insurance, public–private partnership capital insurance (a version of catastrophe insurance), and contingent capital.

EVALUATION OF FINANCIAL SECURITY OF THE REPUBLIC OF CRIMEA

2020 ◽  
pp. 56-67
Author(s):  
Elena Evgenevna Mashyanova ◽  
Elena Aleksandrovna Smirnova
Keyword(s):  
Financial Markets ◽  
Negative Impact ◽  
Gradual Increase ◽  
Financial System ◽  
Financial Security ◽  
Key Factors ◽  
Factors Affecting ◽  
External Threats ◽  
The Republic ◽  
Global Financial System

In modern conditions of development, financial security is an integral part of the overall security of the region and is formed on the basis of the functioning of the financial system. The complication of relationships between key segments of international financial markets, as well as the limited ability to accurately predict future trends in the development of the global financial system, lead to a gradual increase in the risks that accompany the activities of economic entities, and an increase in the number and scale of internal and external threats that have a negative impact on the financial security of the state. This formulation of the issue requires generalization of approaches to determining the financial security of the region in order to further formalize this issue and determine the key factors affecting it. The article considers the types of financial security, as well as certain areas of ensuring the financial security of the region and their priority. In work the assessment of the level of socio-economic development of the region with a view to ensuring financial security on the basis of which offers the main activities and priority areas of implementation of the investment policy that will ensure financial security of the Republic of Crimea.

scholarly journals The Arab world amidst the global financial crisis of 2008–2009

2010 ◽  
Vol 3 (1) ◽  
pp. 38-52
Author(s):  
Shalendra D. Sharma
Keyword(s):  
Financial Crisis ◽  
Financial Markets ◽  
Global Financial Crisis ◽  
Arab World ◽  
The United States ◽  
Arab Countries ◽  
Financial Contagion ◽  
Poor Countries ◽  
Resource Poor ◽  
The Global Financial Crisis

When the problems in the United States housing sector mushroomed into a global financial crisis by September 2008, it was assumed that Arab countries would remain immune: the oil-rich Gulf Cooperation Council (GCC) countries because of their massive financial reserves, and the resource-poor countries because of their limited linkages to the global economic system – in particular, the global financial markets. However, this assumption has proven to be false. The US subprime mortgage collapse not only pushed the advanced economies into recession, but also it shattered global economic confidence, resulting in a massive financial contagion around the world. What explains the Arab World's vulnerability to the crisis? How has the crisis impacted both the resource rich and the resource poor? How have Arab countries responded to the crisis, and what must they do to insulate their economies better from the vagaries of global financial markets? This paper addresses these questions.

scholarly journals The Effects of the Global Financial Crisis on China's Financial Market and Macroeconomy

2012 ◽  
Vol 2012 ◽  
pp. 1-6 ◽  
Author(s):  
Linyue Li ◽  
Thomas D. Willett ◽  
Nan Zhang
Keyword(s):  
Financial Crisis ◽  
Financial Markets ◽  
World Economy ◽  
Global Financial Crisis ◽  
High Growth ◽  
Spillover Effects ◽  
The United States ◽  
Global Recession ◽  
Order Of Magnitude ◽  
The Global Financial Crisis

This paper provides a brief review of the increasing importance of China in the world economy and discusses the spillover effects of the global financial crisis on China's financial markets and macroeconomy. It presents and critiques alternative ways of estimating these effects. Contrary to much popular discussion, China was hit fairly hard by the global recession generated by the financial crisis. It suffered a huge drop in exports, and these effects on the economy were only partially offset by China's huge stimulus program. While growth remained well above international averages, its drop was of the same order of magnitude as for the United States. The paper closes with a brief discussion of some of the major challenges facing China to rebalance its economy in order to sustain high growth.

scholarly journals Over the Cliff: From the Subprime to the Global Financial Crisis

2011 ◽  
Vol 25 (1) ◽  
pp. 49-70 ◽  
Author(s):  
Frederic S Mishkin
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Financial System ◽  
The United States ◽  
Investment Bank ◽  
Government Interventions ◽  
Troubled Asset Relief Program ◽  
The Government ◽  
The Global Financial Crisis ◽  
Relief Program

The financial crisis of 2007 to 2009 can be divided into two distinct phases. The first and more limited phase from August 2007 to August 2008 stemmed from losses in one relatively small segment of the U.S. financial system—namely, subprime residential mortgages. Despite this disruption to financial markets, real GDP in the United States continued to rise into the second quarter of 2008, and forecasters were predicting only a mild recession. In mid-September 2008, however, the financial crisis entered a far more virulent phase. In rapid succession, the investment bank Lehman Brothers entered bankruptcy on September 15, 2008; the insurance firm AIG collapsed on September 16, 2008; there was a run on the Reserve Primary Fund money market fund on the same day; and the highly publicized struggle to pass the Troubled Asset Relief Program (TARP) began. How did something that appeared in mid-2008 to be a significant but fairly mild financial disruption transform into a full-fledged global financial crisis? What caused this transformation? Did the government responses to the global financial crisis help avoid a worldwide depression? What challenges do these government interventions raise for the world financial system and the economy going forward?

Editorial Introduction to the Symposium on the Global Financial Crisis

2009 ◽  
Vol 17 (2) ◽  
pp. 103-108 ◽  
Author(s):  
Sam Ashman
Keyword(s):  
United States ◽  
Political Economy ◽  
Financial Crisis ◽  
Economic Crisis ◽  
Global Financial Crisis ◽  
Banking System ◽  
Financial System ◽  
The United States ◽  
Editorial Introduction ◽  
The Global Financial Crisis

AbstractThe current global economic crisis is historically unprecedented in that it began when poor groups in the United States defaulted on their mortgage-payments and spread fear of 'toxic debt' through an internationalised financial system, bringing the banking system close to collapse and highlighting the very individualised nature of contemporary financial relations. The symposium explores contemporary finance and banking practices in the context of Marxist political economy seeking to develop the notion of financialisation and arguing that banks' increasing reliance on individual households as a source of profits amounts to a form of financial expropriation or additional profit generated in the sphere of circulation.

scholarly journals Post-liberalisation Efficiency and Productivity of the Banking Sector in Pakistan

2001 ◽  
Vol 40 (4II) ◽  
pp. 605-632 ◽  
Author(s):  
Syed Fawad Ali Rizvi
Keyword(s):  
Economic Growth ◽  
Financial Markets ◽  
Banking Sector ◽  
Peer Group ◽  
Financial System ◽  
Empirical Literature ◽  
Key Factors ◽  
Group Efficiency ◽  
Cross Country ◽  
Efficiency And Productivity

It has been long debated in economic literature whether financial markets play a significant role in economic growth and development. [For review see Gertler (1988) and Levine (1997)]. Findings of some recent empirical literature show that well-functioning financial system plays an instrumental role in economic growth, and the causality runs from finance to growth [for cross country evidences see King and Levine (1993, 1993a); Levine and Zervos (1998); Levine, Loayza and Beck (1999); Beck, Levine, and Loayza (1999)]. This, in turn, has led to a search for the key factors that determine the better functioning financial markets. Within the banking sector, efficiency is the core concern of both academics and bank officials. A number of studies have sought to measure the efficiency of financial institutions, to identify the factors that contribute to efficiency of financial system, and to recommend the ways to attain the peer group efficiency levels [Berg (1993); Leaven (1999); Berger and Mester (1997); Miller and Noulas (1996)].

scholarly journals Financial System Stability and Economic Growth in Nigeria

2020 ◽  
Author(s):  
Isaac Ikeafe NJANG ◽  
Eko Eko OMINI ◽  
Festus Victor BEKUN ◽  
Festus Fatai Adedoyin
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Financial Stability ◽  
Financial System ◽  
Granger Causality Test ◽  
System Stability ◽  
Causality Test ◽  
Long Run ◽  
Integration Test ◽  
Sustainable Economic Growth

Abstract This study primarily seeks to evaluate the influence of financial system stability on economic growth in Nigeria from 1986 to 2016. Employing the use of Principal Component Analysis (PCA), this study constructs a Financial System Stability Index (FSSI) as measurement for financial stability. The indicators used in building the index capture three sectors of the Nigerian Financial System (NFS). The three sectors cover the banking sector, the capital market, the external sector and include a fourth component representing financial depth. The resulting index serves as a single qualitative measure for evaluating the level of stability in a nation’s financial system and proves capable of warning of an eminent financial crisis. Employing the use of four macroeconomic indicators, the index is then regressed against the Nigerian economic growth rate with an aim of discovering the short-run and long-run dynamics existing between both variables. The granger causality test, Johansson Co-integration test and Vector Error Correction Model (VECM) are the estimation techniques employed in achieving the objectives of this research. The granger causality test revealed a uni-directional causality between financial stability and economic growth in Nigeria. The Johansson Co-integration test showed that long-run co-integration relationship exists between financial stability and economic growth. Finally, the VECM results find that financial stability displays a negative relationship with economic growth and bears no significant effect on economic growth in Nigeria. The findings disclose that financial stability in Nigeria may be high and has resulted in the underutilization of financial assets thus hampering sustainable economic growth in Nigeria. In conclusion, the outcome of the findings shows that while financial stability may be necessary for initiating economic growth, it is not sufficient for sustaining economic growth in Nigeria. This research work recommends that the FSSI be employed as an additional tool for measuring the condition/state of financial stability in Nigeria and in predicting the onset of a potential financial crisis. The study further recommends that financial authorities must give attention to other aspects of financial development to facilitate sustainable economic growth in Nigeria.

scholarly journals Has the Australian Prudential Regulation Authority Done Enough to Meet Its Legislated Objectives and Prepare Australia for the Next Financial Crisis?

2020 ◽  
Vol 43 (2) ◽  
Author(s):  
Gill North ◽  
Therese Wilson
Keyword(s):  
Financial Crisis ◽  
Ad Hoc ◽  
Financial System ◽  
System Stability ◽  
Residential Property ◽  
Future Health ◽  
Prudential Regulation ◽  
The Future ◽  
Lending Standards

This article examines APRA’s performance against its legislated objectives and the policy rationales and legal theories underlying the supervision of prudential regulation and promotion of financial system stability. The article will investigate the prudential framework in place and actions taken by APRA in the period beginning January 2014 to the end of June 2018, focusing on APRA’s oversight of residential property lending standards because the quality of these loans will be the single largest determinant of the future health of the Australian financial system. The current study’s findings and broader evidence suggest that APRA’s responses to ongoing lax and risky home lending standards were ad hoc, conservative, and reactive.

Securitization and the Financial System

2019 ◽  
pp. 152-170
Author(s):  
Hyun Song Shin
Keyword(s):  
United States ◽  
Financial Crisis ◽  
Financial System ◽  
The United States ◽  
Private Label ◽  
Subprime Mortgages ◽  
System P ◽  
Run Up ◽  
Asset Backed Securities

Mortgage securitisations rose rapidly in the early 2000s through the private label securitisation vehicles that packaged subprime mortgages. The size of the asset-backed securities sector in the United States traces well the overall leverage of the financial system in the run-up to the Great Financial Crisis.

Financial Crisis American Style

2009 ◽  
Vol 8 (3) ◽  
pp. 146-170 ◽  
Author(s):  
Barry Bosworth ◽  
Aaron Flaaen
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
The United States ◽  
Mortgage Market ◽  
Secondary Market ◽  
Domestic Investment ◽  
Regulatory Structure ◽  
Public Deficit ◽  
Export Sector ◽  
The U.S

This paper reviews some of the research on the causes of the financial crisis of 2008–09, highlights the key events that triggered a financial panic in September 2008, and summarizes the key policy actions that the United States has taken to ameliorate the crisis. We document the characteristics and growth of the sub-prime mortgage market, and the distorted incentives and flawed regulatory structure surrounding the secondary market for mortgage-backed securities. We also assess the role for macroeconomic determinants of the crisis that serve to explain the bubble in U.S. asset prices, most notably low global interest rates attributed to either loose monetary policy or excess global saving. Although low global interest rates may have contributed to the boom in housing markets and speculative excesses, we believe that the financial innovations and microeconomic distortions played a more fundamental role. Finally, a recovery marked by higher private saving, weak domestic investment, and a large public deficit appears to be unsustainable. Ultimately, the U.S. economy will need to shift about 3 percent of GDP from domestic consumption to the export sector. This will pose some serious challenges to Asian economies that have come to rely on exports to the U.S. market.

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