scholarly journals The Evolution of the Financial Crisis of 2007—8

2008 ◽  
Vol 206 ◽  
pp. 5-14 ◽  
Author(s):  
Ray Barrell ◽  
E. Philip Davis
Keyword(s):  
Financial Crisis ◽  
North America ◽  
Interest Rates ◽  
Asset Price ◽  
Banking Crises ◽  
Policy Implications ◽  
Regulatory Structure ◽  
Financial Products ◽  
Price Bubble

The financial crisis that started in August 2008 has reached a climax in the autumn of 2008 with a wave of bank nationalisations across North America and Europe. Although banking crises are not uncommon, this is the largest since 1929–33. This paper discusses the build-up to the crisis, looking at the role of low real interest rates in stimulating an asset price bubble. That bubble was stocked by financial innovation and increases in lending. New financial products were not stress tested and have failed in the downturn. After discussing the bubbles we look at the collapse of the complex asset structure, and then put the crisis in the context of the literature. The paper concludes with a discussion of policy implications of the crisis, and advocates a significant improvement in the regulatory structure.

Sukuk and monetary policy transmission in Indonesia: the role of asset price and exchange rate channels

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Suriani Suriani ◽  
M. Shabri Abd. Majid ◽  
Raja Masbar ◽  
Nazaruddin A. Wahid ◽  
Abdul Ghafar Ismail
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Asset Price ◽  
Transmission Mechanism ◽  
Monetary Policy Transmission ◽  
Content Type ◽  
Policy Transmission ◽  
Monetary Policy Transmission Mechanism

Purpose The purpose of this study is to empirically analyze the role of sukuk in the monetary policy transmission mechanism through the asset price and exchange rate channels in the Indonesian economy. Design/methodology/approach Using the monthly data from January 2003 to November 2017, this study uses a multivariate vector error correction model causality framework. To examine the role of sukuk in the monetary policy transmission mechanism through the asset price channel, this study uses the variables of consumption, inflation, interest rates, economic growth and the composite stock price index. Meanwhile, to examine the role of sukuk in the monetary policy transmission mechanism through the exchange rate channel, this study used variables of inflation, interest rates, economic growth, foreign investment and exchange rate. Findings This study documented that sukuk has no causal relationship with inflation through asset price and exchange rate channels. Nevertheless, sukuk has a bidirectional causal relationship with economic growth through asset price and exchange rate channels. Sukuk is also documented to have a causal relationship with monetary policy variables of interest rate and stock prices through asset price and exchange rate channels. Finally, a unidirectional causality is recorded running from the exchange rate to sukuk in the exchange rate channel. Research limitations/implications The finding of independence of the sukuk market from interest rates provides evidence that the trading of the sukuk in Indonesia has been in harmony with the Islamic tenets. Practical implications The relevant Indonesian authorities need to enhance both domestic and global sukuk markets as part of efforts to promote the sustainability of Islamic capital market development in Indonesia. Originality/value To the best of the authors’ knowledge, this study is among the first attempts to empirically investigate the role of sukuk in monetary policy transmission through asset price and exchange rate channels in the context of the Indonesian economy.

scholarly journals From Symbolic Violence to Economic Violence: The Globalizing of the Scottish Banking Elite

2012 ◽  
Vol 33 (2) ◽  
pp. 247-266 ◽  
Author(s):  
Ron Kerr ◽  
Sarah Robinson
Keyword(s):  
Financial Crisis ◽  
North America ◽  
Recent Work ◽  
Symbolic Violence ◽  
Neoliberal Globalization ◽  
Economic Violence ◽  
Corporate Elites ◽  
Sociological Approaches ◽  
Forms Of Violence

The financial crisis has raised questions about the role of corporate elites in contemporary organizations. This article follows recent work on organizational elites that argues for critical sociological approaches to the study of such elites, using, for example, Bourdieu’s concept of field, and for studies of elites in contexts outside North America. Applying Bourdieusian concepts such as forms of violence, we look at the particular case of the Scottish banking elite, focusing on changing enactments of violence within that field, from symbolic violence to economic violence. We trace the movement of the Scottish banking elite from the national-traditional to the global and modernized and demonstrate how members of an elite field can operate in the field of power within their own organization and at the same time within a transorganizational field of peer competitors, thus illustrating how a specific national elite has been affected by neoliberal globalization and its 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.

scholarly journals Monetary Policy and Rational Asset Price Bubbles

2014 ◽  
Vol 104 (3) ◽  
pp. 721-752 ◽  
Author(s):  
Jordi Galí
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Aggregate Demand ◽  
Asset Price ◽  
Optimal Monetary Policy ◽  
Monetary Policies ◽  
Asset Price Bubbles ◽  
Price Bubbles ◽  
Price Bubble ◽  
The Impact

I examine the impact of alternative monetary policy rules on a rational asset price bubble, through the lens of an overlapping generations model with nominal rigidities. A systematic increase in interest rates in response to a growing bubble is shown to enhance the fluctuations in the latter, through its positive effect on bubble growth. The optimal monetary policy seeks to strike a balance between stabilization of the bubble and stabilization of aggregate demand. The paper's main findings call into question the theoretical foundations of the case for “leaning against the wind” monetary policies. (JEL E13, E32, E44, E52, G12)

scholarly journals Are Real Estate Prices Evolving into an Asset Price Bubble?

2021 ◽  
Vol 15 (1) ◽  
pp. 36-48
Author(s):  
Wolfgang Kloppenburg
Keyword(s):  
Real Estate ◽  
Interest Rates ◽  
Asset Price ◽  
Oecd Countries ◽  
Real Estate Market ◽  
Private Debt ◽  
Asset Price Bubbles ◽  
Price Bubbles ◽  
Price Bubble ◽  
Real Estate Prices

The development of real estate prices is of extraordinary importance for the fi nancial and economic system, as undesirable developments could endanger fi nancial stability – as seen in the fi nancial crisis of 2008 and 2009. This applies not only to speculators, but also to private households, which have to borrow to pay the purchase price. The market has been “fueled” in particular by the monetary policy of the central banks – expansion of the money supply and low interest rates. Investors are looking for investment opportunities due to the money glut, and the real estate market still promises a return. Furthermore, many people looking to build are willing to go into debt to buy a property. This demand ultimately has a driving eff ect on real estate prices. The aim of this paper is to compare and analyze the development of real estate prices in the most important OECD countries with those of Germany. A model of real estate prices is presented, which takes into account the most important indicators and provides information on when a price bubble exists. The model shows that asset price bubbles can be identified in some OECD countries. In Germany, on the other hand, there are only signs of a price bubble in a few major cities. Since private debt is low, it does not seem to be a problem across the board in Germany. A general problem remains with regard to the timely detectability of price bubbles.

Using money metaphors in banking discourse

2012 ◽  
Vol 2 (2) ◽  
pp. 201-232 ◽  
Author(s):  
Bianca Tomoni
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Commercial Banks ◽  
Physical Force ◽  
Conceptual Metaphors ◽  
Force Scenario ◽  
National Bank ◽  
Recent Financial Crisis

Drawing on the theory of conceptual metaphors and on its socially and discursively oriented developments, this paper investigates the conceptualisation of money (and related notions like income, repayments, fees, interest rates or profit) in Romanian banking discourse. By analysing corpora composed of 74 documents issued by the National Bank of Romania (BNR) and by three other commercial banks, before and during the recent financial crisis, it aims to show how apparently unrelated metaphoric expressions (with source domains such as medicine, army or water) are in fact connected, giving rise to three coherent scenarios: a caring scenario, a physical force scenario and a river scenario. The article also highlights the role of (money) metaphor in persuading customers, creating identities and transferring ideologies.

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